Retro Video v. Direct Holdings Americas CA2/1 ( 2021 )

Filed 7/28/21 Retro Video v. Direct Holdings Americas CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
RETRO VIDEO, INC., B309882
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. 20STCV06971)
v.
DIRECT HOLDINGS AMERICAS,
INC., et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Rupert A. Byrdsong, Judge. Reversed and
remanded with directions.
Law Offices of Neil J. Fraser, Neil J. Fraser and
James C. Carr for Plaintiff and Appellant.
Dentons US, Jason R. Scheiderer, Samantha Fahr, and
Katherine R. McMorrow for Defendants and Respondents.
____________________________
Retro Video, Inc. (Retro Video) is in the business of
licensing the rights to show publicly vintage video and film clips
on behalf of the owners of the underlying footage from which the
clips are derived. Retro Video alleges it licensed certain clips to
respondent Direct Holdings Americas, Inc. (DHA) and Mosaic
Media Investment Partners LLC (MMIP) for their inclusion in
infomercials promoting Time Life (TL) Music compilations
associated with particular genres or decades. According to Retro
Video, its license agreements with DHA and MMIP allowed these
clips to be used only in connection with specified music collections
during the license terms, and the agreements did not permit
DHA or MMIP to stream the clips on any media platform other
than the TL Music website. Retro Video claims that DHA and
MMIP—either directly or through their affiliates—violated these
restrictions by streaming the clips on other media platforms,
showing them to the public after the license terms had expired,
and using them to promote music compilations that were not
authorized by the licenses.
Retro Video filed suit against DHA, MMIP, several of their
respective officers and directors, an entity that negotiated the
licenses on behalf of DHA and MMIP, and the principals of that
negotiating entity (collectively, respondents) for fraud and deceit,
fraudulent concealment, civil conspiracy, breach of contract,
breach of the implied covenant of good faith and fair dealing,
intentional misrepresentation, negligent misrepresentation,
unjust enrichment, constructive trust, and an accounting. The
trial court thereafter sustained respondents’ general demurrer to
the complaint without leave to amend and dismissed the action
with prejudice on the grounds the action is time-barred; Retro
Video failed to plead sufficient facts to state causes of action for
2
fraud and deceit, fraudulent concealment, civil conspiracy,
intentional misrepresentation, negligent misrepresentation,
unjust enrichment, constructive trust, and an accounting;
Retro Video’s contract-based causes of action against all
respondents other than DHA fail because the complaint did not
plead Retro Video was in privity of contract with those
respondents; and all causes of action are preempted by the
federal Copyright Act.
On appeal, we reject respondents’ argument that Retro
Video failed to allege sufficient facts to state its fraud and deceit,
fraudulent concealment, and intentional misrepresentation
causes of action, along with their challenge to Retro Video’s other
causes of action that are predicated on DHA’s and MMIP’s
alleged misrepresentations—the causes of action for negligent
misrepresentation, unjust enrichment, constructive trust, and an
accounting. We also conclude that Retro Video’s breach of
contract cause of action is preempted by federal copyright law
because the clips come within the scope of copyright protection
and that cause of action asserts a right equivalent to the
exclusive rights protected by the copyright statutory scheme, and
that Retro Video has failed to overcome the presumption of
correctness accorded to the trial court’s conclusion that the
breach of the implied covenant of good faith and fair dealing
cause of action is preempted. We, however, reject respondents’
contention that Retro Video’s other claims are preempted.
Lastly, we conclude that because respondents’ statute of
limitations defense targets only portions of Retro Video’s
remaining causes of action, sustaining a general demurrer on
that defense was error.
3
We thus reverse the trial court’s order of dismissal, remand
the matter to the trial court, and instruct it to vacate its order
sustaining the demurrer without leave to amend and enter a new
order: (a) sustaining the demurrer without leave to amend as to
(i) the breach of contract cause of action, and (ii) the breach of the
implied covenant of good faith and fair dealing cause of action;
and (b) overruling the remainder of respondents’ general
demurrer.
FACTUAL AND PROCEDURAL BACKGROUND
We summarize only those facts pertinent to this appeal.
1. Retro Video’s complaint
On February 19, 2020, Retro Video, on behalf of itself and
as the successor in interest of Research Video, Inc. (Research
Video), filed a complaint against DHA, which is registered and
authorized to do business in California as Direct Holdings
Global LLC (DHG); MMIP; Universal Media, Inc. (UMI);
Christopher Hearing (Hearing); Theodore A. MacKinney
(MacKinney); Kenneth Friedli (Friedli); Kelley Shine (Shine);
Lisa Hollett (Hollett); Gary Newman (Newman); John Paige
(Paige); and Eric Kulberg (Kulberg). The complaint alleges the
following causes of action: (1) fraud and deceit; (2) fraudulent
concealment; (3) civil conspiracy; (4) breach of contract; (5) breach
of the implied covenant of good faith and fair dealing; (6)
intentional misrepresentation; (7) negligent misrepresentation;
(8) unjust enrichment; (9) constructive trust; and (10) an
accounting.1
1 The remainder of this section summarizes the pertinent
allegations in the complaint. For the purposes of the appeal, we
4
Retro Video “is engaged in the business of licensing video
and film footage clips for fees for commercial use by others . . . .
on behalf of the owners of the materials . . . .” Under Retro
Video’s contractual agreements with the footage’s owners,
“[o]wnership of the original programming from which the footage
clips derive remains with the owners; however, [Retro Video] has
specific authorization from the owners of the materials to enforce
the terms and conditions of any licensing agreement and/or seek
damages for breach of any licensing agreement . . . .” Further,
Retro Video’s contracts with the owners of the clips entitle Retro
Video to “an equal percentage share of the revenue generated by
Retro [Video] through [its] placement of clips with customers . . .
through license agreements.”
DHA acquired TL as a subsidiary in late 2003 or early
2004, “and, effective August 24, 2006, the entity known as TL
was merged into and became part of DHG and thereafter
operated under the corporate aegis of . . . DHA.” MMIP acquired
DHA in 2012.
Retro Video and its predecessor in interest, Research Video,
have licensed,2 and Retro Video continues to license, to DHA and
MMIP “video and film footage clips for use in infomercial
assume the truth of these allegations. (See Standard of Review,
post.)
2 At an unspecified point in time during or after 2001,
Retro Video purchased all of Research Video’s assets, including
Research Video’s “right to enforce any and all legal claims
Research [Video] may have against [respondents] herein arising
as a result of [respondents’] business dealings with Research
[Video] before, during and after said corporation’s acquisition
by . . . Retro [Video].”
5
advertising and promotion of [an] extensive library of music
compilation compact discs, marketed to the general public under
the brand name” TL Music.3 The clips licensed “are video/film
footage of various music performance excerpts which directly
correspond to and showcase the artists and tracks on a multitude
of compact disc collections compiled and sold to the public by way
of direct response advertising . . . .” The TL Music infomercials
“aired on television and streamed on internet sites and
platforms . . . .” Retro Video “was and is paid a fixed sum per
licensed clip [that is] set forth in each license agreement . . . .”
Each license was negotiated in Los Angeles and expressly
limited the use of the clips identified therein for a particular
named project, “each of which is a [TL] exclusive compact disc
music compilation comprising multiple discs entitled in such a
manner as to identify music genre or decade, for example
‘Country Music of Your Life’, ‘Heart of Classic Rock’, ‘Pop
Memories of the ‘60s’ and ‘Romancing the ‘70s.’ ” (Italics
omitted.) Each license contained “defined limitations on the
media outlets and platforms upon which [respondents] are
authorized to place the infomercials containing [Retro Video’s]
licensed materials.” From December 13, 2011 onward, the
parties to the licenses agreed that “internet streaming use of
3 Respondents assert that “DHA entered into the contracts
at issue” and “[n]one of the other [respondents] did.” The
complaint, however, avers that Retro Video or its predecessor in
interest, Research Video, issued the licenses at issue to DHA and
MMIP. On demurrer, we must assume the truth of this
allegation. (See Standard of Review, post.)
6
[Retro Video’s] clips would be restricted to ‘Internet Streaming on
[the TL] Music website only.’ ”4 (Italics omitted.)
“During some or all of the time period of the acts
complained of herein,” Hearing was the chief executive officer
and president of DHA and a director of that entity; Friedli was
the secretary, the chief financial officer, and a director of DHA;
MacKinney was the chief financial officer of MMIP, and the
secretary, the chief financial officer, and a chief operations officer
of DHA; Newman was the vice-president of DHA; Hollett was a
director of production for DHA and DHG; and Shine was a
director of production for DHA. These six respondents were
“personally involved in authorizing . . . the licensing of clips for
infomercials from [Retro Video.]” Respondents Hearing, Friedli,
MacKinney, Newman, and Hollett “executed some of the licenses
and license renewals in issue herein . . . .”
UMI is owned and operated by Paige and Kulberg. Paige,
Kulberg, and UMI “are the agents of . . . DHA and MMIP and
act[ ] on behalf of said entities in the acquisition of licenses for
film and video clips from [Retro Video] for use in infomercials
promoting TL music collections on various media outlets and
platforms as is alleged” in the complaint.
Hearing, Friedli, MacKinney, Newman, Hollett, Shine,
Paige, and Kulberg “participated in the creation and pursuit of a
strategy which knowingly and willfully used [Retro Video’s] clips
4 Retro Video acknowledges in its complaint that several
licenses it had issued after December 2011 “inadvertently . . .
appeared to permit unlimited internet streaming.” Retro Video
avers that this term was “not representative of” the media terms
included in licenses Retro Video issued in or after
December 2011.
7
to advertise [TL] music CD collections when [respondents] knew,
or reasonably should have known, use of the clips was
unauthorized because the license agreements for the projects . . .
were . . . expired, or the license agreements expressly forbad[e]
the use of [Retro Video’s] clips on media streaming platforms
other than the [TL] Music website, or were not under license at
all, having been obtained . . . for use in other projects pursuant to
licenses specific to said other projects.” “[T]he acquisition of TL
Music by . . . MMIP, who also acquired . . . DHA at the same
time, authorizing . . . DHA to continue to manage, control,
oversee and do business under the TL Music Collection banner,
as of July 2012 coincided with the beginning of a pattern of
behavior by . . . MMIP, through DHA, in their business dealings
with [Retro Video] which exhibits a conscious, willing and
intentional conspiracy by the individual [respondents] herein,
acting as agents for their respective corporate entities, MMIP,
DHA and UMI designed to defraud and damage [Retro Video] by
the unauthorized use of [Retro Video’s] materials provided under
license, which acts have continued up to and including the end of
2019 and [are] continuing.”
For instance, DHA and MMIP “placed infomercials on new
and emerging media platforms such as Roku and U-Verse”
without obtaining “a new or renewed license agreement with
[Retro Video] before” doing so; DHA and MMIP began streaming
the infomercials “on a continual basis on Roku in October 2013
and on AT&T U-Verse in February 2014.5 Respondents also
5 The complaint alleges that “Roku . . . uses an Over-The-
Top electronic device to stream Video-On-Demand . . . media to
end-users over the internet from a branded streaming video
application,” and that “AT&T’s U-Verse subscription service . . .
8
provided TL Music infomercials to their affiliates without
informing them of the license expiration dates or limitations on
use, which resulted in the unauthorized placement of the clips at
issue on platforms such as YouTube after the relevant licenses
had expired. Further, respondents made “repeated requests
during years 2011 through 2019 . . . for an expansion of internet
streaming usage rights, all of which were rejected by [Retro
Video] on the terms offered . . . .”
Respondents “knew their decision to use [Retro Video’s]
licensed materials in such an unlawful and unauthorized manner
would damage [Retro Video] by diminishing the value of the
footage, which, in part, was established by its rarity.”
Respondents also knew that Retro Video “would have charged a
much higher per-clip licensing fee had [it] known or been told by
[respondents] that their clips were to be used, and were in fact
used, . . . on media platforms and outlets substantially more
extensive than the limitations imposed by the licenses.”
Retro Video did not discover any of the violations of the
license terms alleged in the complaint until “late-August 2017”
when Retro Video “inadvertently stumbled” upon a TL music
infomercial on YouTube that “had been uploaded . . . by or on
behalf of . . . DHA[ and] MMIP . . . to promote and generate sales
of a TL music collection.” Although Retro Video sent a cease-and-
desist letter to DHA in November 2017,6 TL Music infomercials
streams the programming offered on the linear schedules of its
[Internet Protocol TV]-streaming channels upon-request to
end-users through a proprietary set-top box requiring high-speed
internet connectivity . . . .”
6According to the complaint, the letter stated that
“subsequent to the first discovery of unauthorized YouTube
9
containing clips issued under license by Retro Video continued to
appear on unauthorized media platforms and/or after license
expiration without the knowledge or consent of Retro Video.
Paragraph 57 of the complaint identifies each of the
licenses Retro Video claims to have been violated. Each of
paragraph 57’s 48 subparts provides the TL Music project subject
to the license, the number of clips licensed in connection with the
project, the license term, the start/end date of the license, the
renewal periods (if applicable), the media terms of the license,
and the nature of the alleged violation (i.e., streaming the clips
on platforms other than the TL Music website, showing clips in
an infomercial for a project for which the underlying license had
expired, or including clips in infomercials for projects that are not
authorized by Retro Video’s licenses).7 For example, Retro Video
licensed 18 clips in connection with the “We Love the Nightlife”
project from March 2, 2012 to August 1, 2013, and the TL Music
infomercial associated with this project appeared on Roku
between October 2013 and November 2017 and on the TL Music
website between September 2, 2013 and March 13, 2016.
uploads of licensed materials in infomercials in August 2017,
[Retro Video] discovered further unauthorized and unlawful
uploads to other non-permitted media platforms such as Vimeo,
U-Verse and Roku,” and that Retro Video “considered each such
placement to be a material breach of the license terms issued for
each project so shown on streaming media.”
7 Paragraph 57 indicates that several clips appeared in
projects for which no license had been issued. For instance, three
video clips appeared in infomercials for one of two versions of TL
Music’s the “Golden Age of Pop” project, even though Retro Video
had not permitted those three clips to be used in connection with
that project.
10
(Boldface, underscoring, & some capitalization omitted.) The
earliest license term identified in paragraph 57 was from
September 13, 2002 to September 12, 2003, and the latest license
term was from December 27, 2019 to December 26, 2020. The
earliest alleged license violations occurred from January 2013 to
September 2017, and the latest license violations identified in
paragraph 57 transpired from December 27, 2019 to the date of
filing of the complaint (i.e., February 19, 2020).
2. Respondents’ joint demurrer
Respondents filed a joint demurrer, arguing that each
cause of action is time-barred, otherwise fails to state a claim,
and is preempted by federal copyright law.8 With respect to its
statute of limitations defense, respondents argued that all of
Retro Video’s claims accrued no later than 2014 (i.e., when TL
Music infomercials with Retro Video’s clips first appeared on U-
Verse), and that Retro Video’s fraud causes of action are barred
by Code of Civil Procedure section 338, subdivision (d)’s three-
year limitations period and its contract causes of action are
8 In the memorandum of points and authorities
accompanying their demurrer, respondents argued that
Retro Video’s claim for punitive damages should be dismissed
because Retro Video failed to state fraud claims and punitive
damages are not available for breach of contract. This request to
dismiss Retro Video’s prayer for punitive damages is procedurally
improper. (See Ramsden v. Western Union (1977) 71 Cal.App.3d
873, 883 [“[I]t has been held that a prayer for relief is not subject
to demurrer and the fact that a plaintiff has requested exemplary
damages to which he may not be entitled does not affect the
sufficiency of his complaint.”].) In any event, respondents do not
reiterate this contention on appeal.
11
barred by Code of Civil Procedure section 337’s four-year statute
of limitations. Retro Video opposed respondents’ demurrer, and
respondents filed a reply to Retro Video’s opposition.
3. The trial court’s ruling on the demurrer
After hearing respondents’ demurrer, the trial court issued
an order sustaining the demurrer without leave to amend and
dismissing the action in its entirety. The order was prepared by
defense counsel and recited the following conclusions: (1) each
cause of action is time-barred and Retro Video has not pleaded,
and could not plead, facts to support application of the delayed
discovery rule; (2) Retro Video failed to “specifically plead all
elements . . . required” to state its fraud and misrepresentation-
related causes of action, which the court identified as the causes
of action for fraud and deceit, fraudulent concealment, civil
conspiracy, intentional misrepresentation, negligent
misrepresentation, unjust enrichment, constructive trust, and an
accounting; (3) all causes of action against respondents other
than DHA fail because Retro Video has not pleaded, and cannot
plead, privity of contract with those respondents and because
Retro Video has not pleaded, and cannot plead, tortious conduct
by any respondent; (4) Retro Video has failed to allege facts
sufficient to state claims for constructive trust and an accounting;
and (5) Retro Video’s causes of action are preempted by the
federal Copyright Act. Apart from simply listing these
determinations, the court did not articulate its reasoning for
these rulings.
12
Retro Video timely appealed the trial court’s order
dismissing the action.9
STANDARD OF REVIEW
In their notice of demurrer and in the demurrer itself,
respondents intimated they intended to level both a general and
a special demurrer against all causes of action. Nevertheless,
because respondents demurred on the grounds of lack of subject
matter jurisdiction (i.e., by claiming that Retro Video’s causes of
action were preempted) and failure to state a claim, they raised
only a general demurrer to the complaint.10
9 The order did not specify whether the action was
dismissed with or without prejudice. Concurrent with the
issuance of that order, the trial court entered a minute order
stating the complaint was dismissed without prejudice. Eight
days later, the trial court issued another minute order correcting
its prior ruling to indicate the court dismissed the complaint with
prejudice.
10 (See Factual and Procedural Background, part 2, ante;
Holiday Matinee, Inc. v. Rambus, Inc. (2004) 118 Cal.App.4th
1413, 1420–1421 (Holiday Matinee, Inc.) [“A general demurrer is
appropriate where the complaint ‘does not state facts sufficient to
constitute a cause of action.’ [Citation.] . . . [¶] [A] demurrer [for
lack of subject matter jurisdiction] ‘is functionally similar to a
demurrer for failure to state a cause of action, and therefore is
deemed a “general demurrer.” [Citation.]’ [Citation.] [¶] . . . [¶]
‘A general demurrer will lie where the complaint “has included
allegations that clearly disclose some defense or bar to
recovery.” [Citation.]’ [Citation.]”]; Benitez v. Williams (2013)
219 Cal.App.4th 270, 275 [indicating that a state court lacks
subject matter jurisdiction over a claim if copyright law confers
upon federal courts exclusive jurisdiction thereover].)
13
“The function of a demurrer is to test the sufficiency of the
complaint as a matter of law, and it raises only a question of law.
[Citations.] On a question of law, we apply a de novo standard of
review on appeal.” (Holiday Matinee, supra, 118 Cal.App.4th at
p. 1420.) “ ‘ “We treat the demurrer as admitting all material
facts properly pleaded, but not contentions, deductions or
conclusions of fact or law. [Citation.] We also consider matters
which may be judicially noticed.” [Citation.]’ [Citation.]”11
(Holiday Matinee, at pp. 1421.)
11 In conjunction with their demurrer, respondents
requested judicial notice of a document purporting to be one of
Retro Video’s license agreements with DHA. There is no
indication the trial court ruled on this request for judicial notice.
More importantly, respondents’ request relied upon Evidence
Code section 452, subdivision (a) and Evidence Code section 453,
neither of which establishes that this document is a proper
subject of judicial notice. (See Evid. Code, § 452, subd. (a)
[“Judicial notice may be taken of the following matters to the
extent that they are not embraced within Section 451: [¶] (a) The
decisional, constitutional, and statutory law of any state of the
United States and the resolutions and private acts of the
Congress of the United States and of the Legislature of this
state.”]; Evid. Code, § 453 [prescribing the conditions under
which “[t]he trial court shall take judicial notice of any matter
specified in Section 452”].) Further, notwithstanding
respondents’ argument to the contrary, Scott v. JPMorgan Chase
Bank, N.A. (2013) 214 Cal.App.4th 743, does not support their
request for judicial notice. (See Scott, at pp. 746, 752–753 [taking
judicial notice of a contract between a bank and a government
agency as an official act of the executive branch under Evid.
Code, § 452, subd. (c) and as “ ‘[f]acts and propositions that are
not reasonably subject to dispute and are capable of immediate
and accurate determination by resort to sources of reasonably
indisputable accuracy’ ” under Evid. Code, § 452, subd. (h)
14
“ ‘[I]t is error for a trial court to sustain a demurrer
when the plaintiff has stated a cause of action under any
possible legal theory. [Citation.]’ [Citations.]” (Franklin v.
The Monadnock Co. (2007) 151 Cal.App.4th 252, 257.) “ ‘And
when [a demurrer] is sustained without leave to amend, we
decide whether there is a reasonable possibility that the defect
can be cured by amendment: if it can be, the trial court has
abused its discretion and we reverse.’ [Citations.]” (Sanowicz v.
Bacal (2015) 234 Cal.App.4th 1027, 1035.)
DISCUSSION
On appeal, the parties disagree on whether Retro Video has
adequately pleaded its fraud-related causes of action and its
other claims that are predicated on DHA’s and MMIP’s
misrepresentations, Retro Video’s causes of action are preempted
by the federal Copyright Act, and Retro Video’s causes of action
are barred by the applicable statutes of limitation. As discussed
in further detail below, we conclude that Retro Video adequately
alleged its fraud-based causes of action and its other
misrepresentation-based claims; Retro Video’s fourth cause of
action for breach of contract is preempted by federal copyright
law; Retro Video has failed to show the trial court erred in ruling
that the fifth cause of action for breach of the implied covenant of
good faith and fair dealing is preempted; Retro Video’s remaining
causes of action are not preempted; and respondents’ statute of
limitations defense is not dispositive of the entirety of any cause
of action and thus not subject to a general demurrer.
because the contract was posted on the agency’s website].)
Accordingly, we disregard this document, along with respondents’
factual assertions that are predicated on this document.
15
A. Retro Video Adequately Pleads Its Fraud-Related
Causes of Action and Its Other Misrepresentation-
Based Claims
Retro Video’s first cause of action for fraud and deceit,
second cause of action for fraudulent concealment, and sixth
cause of action for intentional misrepresentation are all species of
the tort of deceit. (See 34A Cal.Jur.3d (2016) Fraud & Deceit,
§§ 9, 38 [fraud and deceit, and fraudulent concealment];
Manderville v. PCG&S Group, Inc. (2007) 146 Cal.App.4th 1486,
1497–1498 & fn. 4 [intentional misrepresentation].) The
essential elements of this tort are: “ ‘ “(a) misrepresentation
(false representation, concealment, or nondisclosure);
(b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to
induce reliance; (d) justifiable reliance; and (e) resulting
damage.” ’ [Citation.]” (Thrifty Payless, Inc. v. The Americana at
Brand, LLC (2013) 218 Cal.App.4th 1230, 1239 (Thrifty Payless,
Inc.).)
“Each element of a fraud claim must be pleaded with
specificity. [Citation.] ‘The specificity requirement means a
plaintiff must allege facts showing how, when, where, to whom,
and by what means the representations were made, and, in the
case of a corporate defendant, the plaintiff must allege the names
of the persons who made the representations, their authority to
speak on behalf of the corporation, to whom they spoke, what
they said or wrote, and when the representation was made.’
[Citation.] . . . The specificity requirement serves two purposes:
‘to apprise the defendant of the specific grounds for the charge
and enable the court to determine whether there is any basis for
16
the cause of action.’ [Citation.]”12 (Orcilla v. Big Sur, Inc. (2016)
244 Cal.App.4th 982, 1008.)
Respondents challenge Retro Video’s “fraud-related
claims.”13 Specifically, they contend that “Retro[ Video’s]
complaint failed to allege an actionable misrepresentation,” Retro
Video cannot state a claim for fraudulent concealment because
respondents had no duty to disclose any fact, and Retro Video has
not alleged the element of “justifiable reliance.” We disagree.
12 Respondents apparently argue that Retro Video must
meet this heightened pleading standard because Retro Video was
capable of discovering the alleged falsity of the representations at
issue, given that the TL Music infomercials were publicly
disseminated on television and on internet streaming platforms.
Because we ultimately conclude that Retro Video has satisfied
this standard with regard to the elements disputed on appeal, we
need not address whether a relaxed pleading standard is also
available to Retro Video. Further, insofar as respondents
contend that their public dissemination of the infomercials
establishes that Retro Video failed to state a claim for fraudulent
concealment, we reject that argument. (See Vega v. Jones, Day,
Reavis & Pogue (2004) 121 Cal.App.4th 282, 295 (Vega) [“[T]he
contention that publicly available information cannot form the
basis for a concealment claim is mistaken. The mere fact that
information exists somewhere in the public domain is by no
means conclusive.”].)
13 With the exception of the cause of action for fraudulent
concealment, respondents do not identify which causes of action
they consider to be “fraud-related claims.” Nonetheless, given the
elements they have challenged on appeal and their use of the
label “fraud-related claims[,]” it is apparent respondents are
referring at least to the complaint’s causes of action for fraud and
deceit, fraudulent concealment, and intentional
misrepresentation.
17
First, respondents argue that “Retro [Video] failed to plead
the name of any person making the supposed misrepresentations,
nor any medium by which they were made, nor the date of the
representation, nor any other of the information required to put
[respondents] on notice.” To the contrary, the complaint contains
allegations identifying which respondents executed certain
licenses, when they executed these licenses, and their authority
to do so.
For instance, Retro Video alleges that “[d]uring some or all
of the time period of the acts complained of herein,” MacKinney
was a chief financial officer of MMIP and a secretary, chief
financial officer, and chief operations officer of DHA who was
“responsible for the multi-channel television and digital
streaming strategy of DHA,” and that he signed several licenses
on behalf of DHA, including the “ ‘Oldies But Goodies’ ”
agreement (which he executed on April 12, 2017 and
January 5, 2018) and the “ ‘Time Life Presents the 60’s’ ”
agreement (which he executed on August 22, 2017). (Italics
omitted.) Retro Video also alleges that each of those licenses
authorized use of the clips for only specified periods of time and
allowed for “internet streaming . . . on [the TL] Music Website
Only,” and that DHA violated those restrictions. (Italics
omitted.) Further, by signing these licenses, MacKinney
promised that DHA would adhere to the licenses’ restrictions on
the use of the clips. (See 34A Cal.Jur.3d, supra, Fraud & Deceit,
§ 35 [observing that a representation can give rise to both deceit
claims (by virtue of a promissory fraud theory) and contract
claims].) We believe that these allegations are sufficiently
detailed to provide respondents with adequate notice to defend
18
against Retro Video’s fraud claims and for us to assess the fraud-
related causes of action.
Respondents further contend Retro Video cannot proceed
on a fraudulent concealment theory because DHA and MMIP
were under no duty to disclose any facts to Retro Video.14 As set
forth above, by entering into contracts that restricted the time
and manner in which the film and video clips could be used, DHA
and MMIP represented they would adhere to those limitations.
Yet, Retro Video maintains that at the time they made these
representations, DHA and MMIP had no intention of complying
with the licenses’ restrictions on dissemination, and that they
intended to permit: The infomercials to be streamed on platforms
other than the TL Music website, the clips to be used in
connection with projects unauthorized by the licenses, and the
clips to be used after the relevant licenses had expired. Indeed,
Retro Video alleges in its complaint that “[i]n late 2010, . . .
agents for . . . DHA [and] MMIP . . . began to press [Retro Video]
for the rights by license to advertise the [TL] music collections
online without restriction,” and, after Retro Video “did not accede
to th[is] request,” DHA and MMIP later streamed infomercials on
the other platforms anyway. Under these circumstances, Retro
Video has sufficiently alleged the “nondisclosure” element of
its fraudulent concealment cause of action. (See Vega, supra,
121 Cal.App.4th at p. 294 [“[A]ctive concealment may exist where
a party ‘[w]hile under no duty to speak, nevertheless does so, but
14 As we noted earlier, although respondents claim that
DHA was the only respondent that was a party to the licenses in
question, we must assume the truth of the complaint’s allegation
that MMIP was a party to several of them. (See fn. 3 &
accompanying text, ante.)
19
does not speak honestly or makes misleading statements or
suppresses facts which materially qualify those stated.’ ”].)
Lastly, respondents contend that Retro Video failed to
plead justifiable reliance because it “does not allege that it took
any particular action in reliance,” and Retro Video continued to
enter into “nearly identical licenses” for the clips after it
discovered their unauthorized use. Respondents ignore the
complaint’s allegations that Retro Video “would have charged a
much higher per-clip licensing fee” had it been aware that DHA
and MMIP intended to breach the licenses’ restrictions on use.
Furthermore, because the complaint does not identify the fees
charged for licenses issued after Retro Video discovered the
falsity of DHA’s and MMIP’s representations, we will not
discount or ignore Retro Video’s allegation that it would have
charged a higher fee for the clips had it been aware of DHA’s and
MMIP’s scheme. Because this is not “ ‘ “the rare case where the
undisputed facts leave no room for a reasonable difference of
opinion, the question of whether [Retro Video’s] reliance [was]
reasonable is a question of fact.” ’ [Citation.]” (See Thrifty
Payless, Inc., supra, 218 Cal.App.4th at p. 1239.)
Having rejected respondents’ challenges to the first cause of
action for fraud and deceit, the second cause of action for
fraudulent concealment, and the sixth cause of action for
intentional misrepresentation, we conclude the trial court erred
in sustaining the demurrer as to these claims. (See Pack v. Kings
County Human Services Agency (2001) 89 Cal.App.4th 821, 826,
fn. 5 (Pack) [“ ‘Although it is the appellant’s task to show error,
there is a corresponding obligation on the part of the respondent
to aid the appellate court in sustaining the judgment. “[I]t is as
much the duty of the respondent to assist the [appellate] court
20
upon the appeal as it is to properly present a case in the first
instance, in the court below.” [Citations.]’ [Citation.]”].)
With regard to Retro Video’s other causes of action,
respondents’ briefing suggests they believe that (a) Retro Video’s
fourth cause of action for breach of contract and fifth cause of
action for breach of the implied covenant of good faith and fair
dealing fail against all respondents who are not parties to the
licenses at issue, and (b) Retro Video’s seventh cause of action for
negligent misrepresentation, eighth cause of action for unjust
enrichment, ninth cause of action for constructive trust, and
tenth cause of action for an accounting fail because the complaint
does not “allege any specific misrepresentation (or other tort)
made by any defendant, much less any specific defendant.” ~(See
RB 53.)~ We need not resolve their first contention because we
have concluded that the two contract-based causes of action are
preempted. (See Discussion, part B.1, post.) The second
contention fails because, as we have explained in this section,
Retro Video has adequately pleaded the misrepresentations
forming the basis of their claims.
Additionally, Retro Video alleges a conspiracy cause of
action. In particular, Retro Video avers that “[t]his conspiracy,
carried out by the individual defendants on behalf of and at the
instruction of . . . DHA[ and] MMIP . . . was designed to, and did,
fraudulently deprive plaintiff of income from their business of clip
licensing and diverted, and continues to divert, profits gathered
by defendants from their unauthorized use, including conscious
acts constituting fraud, fraudulent concealment and intentional
misrepresentation.” (Italics added.) It is thus apparent that
Retro Video’s civil conspiracy allegations complement its causes
of action for fraud and deceit, fraudulent concealment, and
21
intentional misrepresentation. Accordingly, we do not treat the
conspiracy count as a separate cause of action, but instead as a
theory potentially allowing the imposition of vicarious liability on
respondents who did not personally make the misrepresentation
or false promise. (See City of Industry v. City of Fillmore (2011)
198 Cal.App.4th 191, 199, 212 [“We construe the fifth count for
fraud and the 10th count for conspiracy together as a single count
for fraud.”].)
Although Retro Video points out in its opening brief that it
has invoked the doctrine of civil conspiracy to establish liability
against respondents who did not personally make the
misrepresentation or false promise, respondents do not claim the
pleading fails to allege sufficient facts to impose liability via a
conspiracy theory. We thus do not address this issue further.
(See Pack, supra, 89 Cal.App.4th at p. 826, fn. 5.)
B. Although Retro Video’s Causes of Action for Breach
of Contract and Breach of the Implied Covenant of
Good Faith and Fair Dealing Are Preempted by the
Copyright Act, Retro Video’s Other Causes of Action
Survive Preemption
“In addressing a question of preemption, we start with the
presumption that the historic police powers of the states are not
to be superseded by federal law unless there is a clear and
manifest purpose on the part of Congress to do so.” (United
States Golf Assn. v. Arroyo Software Corp. (1999) 69 Cal.App.4th
607, 620; see id. at pp. 619–620 [invoking this principle in
addressing the argument that a plaintiff’s claims were preempted
by the federal Copyright Act].) “[T]he party asserting
preemption” has the “burden” of rebutting this presumption.
22
(See Solorzano v. Superior Court (1992) 10 Cal.App.4th
1135, 1139.)
Title 17 United States Code section 301(a) provides: “On or
after January 1, 1978, all legal or equitable rights that are
equivalent to any of the exclusive rights within the general scope
of copyright as specified by section 106 in works of authorship
that are fixed in a tangible medium of expression and come
within the subject matter of copyright as specified by sections 102
and 103, whether created before or after that date and whether
published or unpublished, are governed exclusively by this title.
Thereafter, no person is entitled to any such right or equivalent
right in any such work under the common law or statutes of any
State.” (17 U.S.C. § 301(a).)
“ ‘[F]or preemption to occur under [this provision of] the
[Copyright] Act, two conditions must be met: first, the subject of
the claim must be a work fixed in a tangible medium of
expression and come within the subject matter or scope of
copyright protection . . . , and second, the right asserted under
state law must be equivalent to the exclusive rights contained in
section 106.’ [Citations.]” (See Kabehie v. Zoland (2002)
102 Cal.App.4th 513, 520 (Kabehie).)
Title 17 United States Code section 102(a)(6) extends
copyright protection to “motion pictures and other audiovisual
works” that are “fixed in any tangible medium of expression, now
known or later developed, from which they can be perceived,
reproduced, or otherwise communicated, either directly or with
the aid of a machine or device.” (See 17 U.S.C. § 102(a)(6).)
Respondents posit that the “video and film footage clips” that
Retro Video licenses constitute “motion pictures” and
“audiovisual works” that come within the subject matter of
23
copyright for the purposes of title 17 United States Code
section 102. Retro Video does not contest that assertion.
Accordingly, Retro Video has in effect conceded that respondents
have satisfied the first condition for preemption under title 17
United States Code section 301(a). (Rudick v. State Bd. of
Optometry (2019) 41 Cal.App.5th 77, 89–90 (Rudick) [concluding
that the appellants made an implicit concession by “failing to
respond in their reply brief to the [respondent’s] argument on
th[at] point”].)
Regarding the second condition for preemption, “ ‘a right
that is “equivalent to copyright” is one that is infringed by the
mere act of reproduction, performance, distribution, or display.’
[Citation.] If the act of reproduction, performance, distribution or
display will in itself infringe the state-created right, then such
right is preempted. [Citation.] . . . ‘But if qualitatively other
elements are required, instead of, or in addition to, the acts of
reproduction, performance, distribution, or display, in order to
constitute a state-created cause of action, then the right does not
lie “within the general scope of copyright,” and there is no pre-
emption.’ [Citation.] [¶] . . . ‘In a proper case, the same conduct
may support relief under multiple theories. Preemption law,
however, requires analysis of each theory to determine whether it
contains the necessary qualitatively different extra element
distinguishing it from copyright protection.’ [Citation.]”
(Kabehie, supra, 102 Cal.App.4th at pp. 520–521.)
1. Retro Video’s breach of contract and breach of the
implied covenant of good faith and fair dealing claims
are preempted
Retro Video’s fourth cause of action for breach contract fails
this “extra element” test. In its complaint, Retro Video alleges
24
that DHA and MMIP violated the terms and conditions of
Retro Video’s licenses by disseminating (and, in some cases,
allowing their affiliates to disseminate) infomercials containing
video and film clips: (a) on media streaming platforms other than
the TL Music website; and/or (b) that pertain to (i) projects
governed by licenses that had expired, or (ii) projects that were
not authorized by the licenses associated with the clips at issue.
In essence, Retro Video avers that DHA and MMIP violated its
licenses’ restrictions on the “public performance” of these video
and film clips, which is an exclusive right contained in title 17
United States Code section 106.15 Because Retro Video’s breach
of contract cause of action is based on the “promise . . . simply to
refrain from copying the material or infringing the rights
protected by copyright,” this claim does not satisfy the “extra
element” test and is preempted by title 17 United States Code
section 301(a). (See Kabehie, supra, 102 Cal.App.4th at p. 526.)
Retro Video resists this conclusion, arguing that it “licensed
clip footage in return for a promise of payment,” and that “[t]he
promise of payment provides the ‘extra element’ which changes
the nature of an action . . . and thereby nullifies preemption.”
15 (See 17 U.S.C. § 106(4) [“[T]he owner of copyright under
this title has the exclusive rights to do and to authorize any of the
following: [¶] . . . [¶] [I]n the case of . . . motion pictures and
other audiovisual works, to perform the copyrighted work
publicly[.]”]; id., § 101 [“To perform or display a work ‘publicly’
means [¶] . . . [¶] to transmit or otherwise communicate a
performance or display of the work . . . to the public, by means of
any device or process . . . .”]; Disney Enterprises, Inc. v. VidAngel,
Inc. (C.D. Cal. 2019) 371 F.Supp.3d 708, 713, 718 [holding that a
defendant publicly performed certain motion pictures by
streaming them to its customers].)
25
We acknowledge that “a right to payment” is “[a] right that is
qualitatively different from copyright” and that a contract claim
premised on the breach of a promise to pay can survive
preemption. (See Kabehie, supra, 102 Cal.App.4th at p. 528.)
The breach of a promise to pay is not what Retro Video alleges.
Instead, it complains of the unauthorized use of its video clips.
Because Retro Video concedes that it was paid “a fixed sum per
licensed clip set forth in each license,” rather than a variable fee
tied in some way to the extent to which the clips were
disseminated, the complaint is not susceptible to Retro Video’s
description of its breach of contract claim.
Retro Video argues that it is without a remedy if its breach
of contract claim is preempted. It reasons that it lacks standing
to bring a copyright claim because the owners of the video and
film clips at issue have retained the exclusive rights to that
material. Whether Retro Video may recover under the federal
Copyright Act, however, has no bearing on whether a claim
satisfies the “extra element” test for copyright preemption. (See
Kabehie, supra, 102 Cal.App.4th at p. 520; ibid. [“[A] state right
[may be] preempted even if the state-created right is broader or
narrower than the comparable federal right.”]; Sybersound
Records, Inc. v. UAV Corp. (9th Cir. 2008) 517 F.3d 1137, 1150–
1151 [holding that state-law claims were preempted by the
Copyright Act even though the plaintiff lacked standing to bring
an infringement claim].)
Retro Video does not suggest in its appellate briefing how it
could amend its breach of contract claim to avoid preemption.
We, moreover, cannot discern any such amendment that would
not change the theory of its contract claim. (See Community
Water Coalition v. Santa Cruz County Local Agency Formation
26
Com. (2011) 200 Cal.App.4th 1317, 1329 [“It is the rule that when
a trial court sustains a demurrer with leave to amend, the scope
of the grant of leave is ordinarily a limited one. It gives the
pleader an opportunity to cure the defects in the particular
causes of action to which the demurrer was sustained, but that is
all.”].)
In order to state a breach of contract claim that would
avoid federal copyright preemption, Retro Video would need to
allege new facts establishing that DHA and/or MMIP breached a
term of the licenses other than a restriction on the use of the
video and film clips. (See Kabehie, supra, 102 Cal.App.4th at
p. 528.) Such an amendment would not simply remedy a defect
in its contract cause of action, it would constitute an entirely new
factual theory that is absent from the complaint before us. Thus,
the trial court did not abuse its discretion in declining to grant
Retro Video leave to amend to replead its fourth cause of action
for breach of contract.
Additionally, we acknowledge that some contractual
promises may escape preemption because they are “qualitatively
different from copyright,” and that, in order to determine
whether a contract claim is preempted, we must conduct “a fact-
specific analysis of the particular promise alleged to have been
breached and the particular right alleged to have been violated.”
(See Kabehie, supra, 102 Cal.App.4th at pp. 521, 528.) A claim
for breach of the implied covenant of good faith and fair dealing
relies on a contracting party’s representation that it “will [not] do
anything to destroy or injure the right of the other to receive the
benefits of the contract.” (See 14A Cal.Jur.3d (2016) Contracts,
§ 249.)
27
In connection with the preemption issue, Retro Video does
not address its fifth cause of action specifically, and a fortiori,
whether it has alleged an extra element defeating preemption of
that cause of action. Consequently, Retro Video has failed to
overcome the presumption of correctness accorded to the trial
court’s ruling sustaining the demurrer without leave to amend as
to Retro Video’s claim for breach of the implied covenant of good
faith and fair dealing. (See Yu v. University of La Verne (2011)
196 Cal.App.4th 779, 787 [“ ‘ “A judgment or order of the lower
court is presumed correct. All intendments and presumptions are
indulged to support it on matters as to which the record is silent,
and error must be affirmatively shown.” ’ ”]; Needelman v. DeWolf
Realty Co., Inc. (2015) 239 Cal.App.4th 750, 762 [“It is not this
court’s role to construct arguments that would undermine the
lower court’s judgment and defeat the presumption of
correctness. Rather, an appellant is required to present a
cognizable legal argument in support of reversal of the judgment
and when the appellant fails to support an issue with pertinent
or cognizable argument, ‘it may be deemed abandoned and
discussion by the reviewing court is unnecessary.’ [Citation.]”].)
2. Retro Video’s fraud and other claims are not
preempted
“ ‘Under the extra element test, it is clear that federal
copyright law does not preempt state causes of action alleging
fraud . . . . Fraud involves “the extra element of
misrepresentation.” [Citation.]’ [Citation.]” (Kabehie, supra,
102 Cal.App.4th at p. 530, quoting Gladstone v. Hillel (1988)
203 Cal.App.3d 977, 987.) In Kabehie, plaintiffs, producers of
music cassettes, videotapes, and compact discs, brought, inter
alia, a fraud cause of action against defendants from whom
28
plaintiffs had purchased exclusive rights, title, and interests in
certain music albums. (See Kabehie, at p. 518.) The agreements
also required the defendants to deliver the master recordings of
the albums. (See ibid.) In derogation of their agreements,
defendants themselves started producing, duplicating,
advertising, and selling the “musical materials” covered by the
agreements, and they did not deliver the master recordings. (See
ibid.)
The Kabehie court rejected defendants’ preemption defense
to the fraud cause of action. (Kabehie, supra, 102 Cal.App.4th at
pp. 529–530.) The court found the extra element defeating
preemption in defendants’ misrepresentation that they owned the
interests in each of the musical works, promised to transfer the
rights to the musical works, including the master recordings, to
plaintiffs exclusively, and promised not to duplicate or sell the
music in any form. (See ibid.) As the court concluded,
defendants had “made the misrepresentations with the intent to
defraud [plaintiffs].” (Id. at p. 530.)
The Ninth Circuit Court of Appeals has also held that “the
element of misrepresentation” constitutes an “ ‘extra element’ ”
that “distinguishes” a fraud claim “from one based on copyright”
such that it “is not substantially equivalent to a claim for
copyright infringement.” (See Valente-Kritzer Video v. Pinckney
(9th Cir. 1989) 881 F.2d 772, 776 (Valente-Kritzer Video).) There,
the circuit court held that the Copyright Act did not preempt a
fraud claim predicated on an “intentional[ ] misrepresent[ation of
the defendants’] intent to perform [a] contract” obligating them to
transfer to the plaintiff “the right to co-produce, distribute, and
sell [a] videocassette” of a film. (See id. at pp. 773–774, 776.)
The court observed that not preempting such a fraud claim
29
“appears to be consistent with congressional intent.” (Id. at
p. 776; ibid. [“ ‘[T]he general laws of defamation and fraud, would
remain unaffected as long as the causes of action contain
elements . . . that are different in kind from copyright
infringement[,]’ ” quoting H.R. Rep. No. 94–1476, 94th Cong., 2d
Sess. 132, reprinted in 1976 U.S. Code Cong. & Admin. News
5659, 5748]. )
Retro Video alleges the “extra element” of
misrepresentation in its first cause of action for fraud and deceit,
second cause of action for fraudulent concealment, and sixth
cause of action for intentional misrepresentation. As we have
described in Discussion, part A, ante, Retro Video’s causes of
action for fraud and deceit, fraudulent concealment, and
intentional misrepresentation each rely on the theory that by
executing the licenses in question, DHA and MMIP represented
they would adhere to the licenses’ limitations on the
dissemination of the clips. Retro Video alleges that these
representations were false when DHA and MMIP made them
because these respondents intended (either directly, or in some
cases, through their affiliates) to use the clips in connection with
projects for which the licenses had expired, stream the clips on
platforms other than the TL Music website, and include the clips
in infomercials for projects that “were not under license at all”
but had “been obtained by . . . DHA and/or MMIP for use in other
projects pursuant to licenses specific to said other projects.”
Under Kabehie and Valente-Kritzer Video, these allegations are
sufficient to defeat preemption under the federal Copyright Act.16
16 Respondents claim that an unpublished federal district
court decision “held fraud and misrepresentation causes of action
preempted when the plaintiff failed to identify a
30
Respondents do not explain why the claim for negligent
misrepresentation should be treated any differently than Retro
Video’s fraud claims, even though both types of claims are
predicated on the same “extra element” of a misrepresentation.
(See Borman v. Brown (2021) 59 Cal.App.5th 1048, 1060 [stating
that an element of negligent misrepresentation is “ ‘the
misrepresentation of a past or existing material fact’ ”].)
Furthermore, as pleaded, the eighth cause of action for unjust
enrichment, the ninth cause of action for constructive trust, and
the 10th cause of action for an accounting are based on
respondents’ alleged “fraudulent” conduct. Respondents fail to
explain why, notwithstanding the aforesaid allegations of fraud,
the eighth, ninth, and 10th causes of action should be treated any
differently than Retro Video’s fraud and deceit, fraudulent
concealment, and intentional misrepresentation claims.17
misrepresentation beyond unauthorized use of the work, as here.”
(Citing McCormick v. Sony Pictures Entertainment (C.D. Cal.
Nov. 17, 2008) No. CV 07-05697 MMM (PLAx) [2008 WL
11336160, at p. *10].) Respondents’ reliance on McCormick is
unavailing because the plaintiff in that case did not allege the
defendant had made any false promises to him at all; instead, the
plaintiff claimed the defendant simply used his screenplay
without authorization. (See id. at pp. *1, *10.)
17 Indeed, Retro Video and respondents both seem to treat
the complaint’s causes of action as if they fall into two distinct
categories: (1) contract claims, and (2) misrepresentation claims.
As discussed in this section, we conclude that the second category
(misrepresentation claims) is not preempted because the claims
therein contain the extra element of misrepresentation.
Additionally, as we explained Discussion, part A, ante, we
do not consider Retro Video’s third cause of action for conspiracy
to be a standalone claim, but rather a means to impose vicarious
31
In sum, although we do not disturb the trial court’s rulings
sustaining, without leave to amend, respondents’ demurrer to the
fourth cause of action for breach of contract and the fifth cause of
action for breach of the implied covenant of good faith and fair
dealing, the trial court erred in finding that Retro Video’s other
causes of action are preempted.
C. Respondents’ Statute of Limitations Defense Cannot
Be Raised on Demurrer Because It Does Not Dispose
of the Entirety of any Cause of Action
Respondents assert—and Retro Video does not dispute—
that all of Retro Video’s remaining causes of action are governed
by Code of Civil Procedure section 338, subdivision (d)’s three-
year statute of limitations.18 (Rudick, supra, 41 Cal.App.5th at
pp. 89–90.)
Code of Civil Procedure section 338, subdivision (d)
provides that “[a]n action for relief on the ground of fraud or
mistake” does not accrue “until the discovery, by the aggrieved
party, of the facts constituting the fraud or mistake.” (See Code
Civ. Proc., § 338, subd. (d).) As noted in our Factual and
Procedural Background, part 1, ante, Retro Video alleges that
liability on certain respondents for the fraud and deceit,
fraudulent concealment, and intentional misrepresentation
causes of action.
18 Because we have concluded Retro Video’s breach of
contract and breach of the implied covenant of good faith and fair
dealing causes of action are preempted, we do not address
whether the trial court erred in sustaining the demurrer on
statute of limitations grounds as to these claims. (See
Discussion, part B.1, ante.)
32
certain breaches of Retro Video’s licenses occurred within the
three-to-four-year period preceding the commencement of this
action on February 19, 2020. In fact, several of the licenses in
question did not even become operative until after
February 19, 2017. It is therefore unsurprising that respondents
argue that Retro Video’s claims are “partially time-barred” and
that “all fraud related claims that accrued prior to
February 19, 2017 . . . are barred by the applicable statutes of
limitations.” (Italics added.)
“[A] general demurrer may not be sustained . . . as to a
portion of a cause of action. [Citation.] . . . [D]efendants may
attack any portion of a cause of action that is ‘substantively
defective on the face of the complaint . . . by filing a motion to
strike.’ [Citation.]” (See Daniels v. Select Portfolio Servicing, Inc.
(2016) 246 Cal.App.4th 1150, 1167.) Respondents did not file a
motion to strike. Accordingly, the trial court erred in sustaining
the demurrer to Retro Video’s remaining causes of action based
on respondents’ statute of limitations defense. (See id. at p. 1167,
fn. 9 [“Because a demurrer may not be sustained as to a portion
of a cause of action, we decline to address respondents’
arguments that appellants’ intentional misrepresentation,
negligent misrepresentation, and promissory estoppel claims are
partially time-barred.”].)
33
DISPOSITION
We reverse the trial court’s judgment of dismissal, and
remand with instructions to vacate its order sustaining the
demurrer without leave to amend and issue a new order:
(a) sustaining the demurrer without leave to amend as to (i) the
complaint’s fourth cause of action for breach of contract, and
(ii) the complaint’s fifth cause of action for breach of the implied
covenant of good faith and fair dealing; and (b) overruling the
remainder of the demurrer. Appellant Retro Video, Inc. is
awarded its costs on appeal.
NOT TO BE PUBLISHED.
BENDIX, J.
We concur:
ROTHSCHILD, P. J.
CHANEY, J.
34