Welty v. Offspring CA2/2 ( 2024 )

Filed 10/9/24 Welty v. Offspring CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 TWO
RON WELTY, B328648
Plaintiff and Appellant, (Los Angeles County
Super. Ct.
v. No. 20STCV34993)
OFFSPRING, INC., et al.,
Defendants and
Respondents.
APPEAL from a judgment and order of the Superior Court
of Los Angeles County, William F. Fahey, Judge. Affirmed.
Thigpen Legal and Jordanna G. Thigpen for Plaintiff and
Appellant.
King, Holmes, Paterno & Soriano, Howard E. King and
John G. Snow for Defendants and Respondents Offspring, Inc.;
The Offspring; 1265 Productions, Inc.; Bryan Holland; and Kevin
Wasserman.
George Cooper Rudolph for Defendant and Respondent
Gregory Kriesel.
******
Ron Welty appeals from a judgment against him in this
action for breach of contract, breach of implied covenant of good
faith and fair dealing, breach of fiduciary duty and related causes
of action brought by Welty against Offspring, Inc.; The Offspring;
1265 Productions, Inc.; Bryan Holland; Kevin Wasserman; and
Gregory Kriesel (collectively respondents). The trial court held
various proceedings over two and a half years including a
bifurcated hearing on contract interpretation, a motion for
summary adjudication of certain issues, and a bench trial.
Following the proceedings, judgment was entered in favor of
respondents. The court later granted respondents’ motion for
contractual attorney fees and costs. Welty also separately
appealed from the order granting respondents’ attorney fees.
This court consolidated the two matters.
Finding no reversible error, we affirm the judgment in full.
FACTUAL BACKGROUND
Welty is a former drummer for the band known as The
Offspring. Welty was a member of The Offspring from 1987 to
2003, during which time the band released six albums. After
Welty was terminated, the band released four more albums.
Contracts
In March 2004, Welty and respondents entered into a
“Settlement Agreement and Mutual General Release of All
Claims” (SA). Paragraph 2 of the SA described various payments
2
that Welty was entitled to receive after the date he disassociated
from the band. Welty agreed he would “not share in any revenue
derived by the Group or any Entity from any source not expressly
described” in the SA.
All master recordings embodying Welty’s musical
performances as a member of the band were referred to as the
“Welty Masters.”1 All master recordings in the album entitled
“Splinter” were known as “the “Splinter Masters.”2 The term
“Masters,” within the SA, was defined to mean “the Welty
Masters, the Splinter Masters, and the master recordings
embodied on LP5 and LP6” or replacements of those albums.3
The SA provided a formula to determine Welty’s share of a
future catalog sale. The formula provided Welty’s share “shall be
determined by multiplying the Nonallocated License fee received
by the Group by a fraction, the numerator of which shall be the
number of U.S. SoundScan sales of the Group Albums embodying
solely Masters during the immediately preceding three (3) year
period (the ‘Test Period’) and the denominator of which shall be
the number of U.S. SoundScan sales of all Group Albums
embodying master recordings, including the Masters, during the
1 Welty was contractually entitled to 25 percent of net
royalties resulting from exploitations of the Welty Masters.
2 Welty was contractually entitled to 20 percent of the
revenue derived from the Splinter album, which was released in
2003.
3 Welty was contractually entitled to 10 percent of the
revenue derived from LP5, which was released in 2008, and 5
percent of LP6, which was released in 2012.
3
Test Period (the ‘Test Period Fraction’), and applying the
applicable Welty share(s) to the product.”
The Offspring released a “Greatest Hits” album in 2005
(GHLP). In anticipation of the release of GHLP, respondents and
Welty entered into an agreement entitled “Greatest Hits Advance
Allocation” (GHAA). The GHAA was created “for purposes of
allocating as among [Welty] and [respondents] the advance”
regarding the GHLP payable by Sony Music (Sony). The GHAA
designated 3/16 of the advance towards new material and
expressly provided that Welty “shall not share in that allocation,
but [Welty] will share in the remainder of the Hits Advance.”
The new material constituted “new previously unreleased
recording” that respondents intended to release on the GHLP.
The net amount payable to Welty under the GHAA was
$221,239.06.
Accounting
Before February 2010 The Offspring’s business manager
was certified public accountant Lisa Ferguson. Thereafter, The
Offspring hired Michael Karlin and Peter Fugedi of Nigro Karlin
(NKTSB). Welty hired Ferguson in 2003. Implementing the
parties’ contracts was part of the business managers’ jobs. Karlin
admitted there were payments to Welty that were untimely
made. He also conceded Fugedi made mistakes when paying
Welty. Karlin was unaware if Welty was receiving accountings
as provided in the agreement. Ferguson recalled having a
specific conversation with Fugedi in 2010 about why she was not
receiving certain royalties for Welty. She recalled mentioning
many times to Fugedi that Welty was not receiving royalties due,
without a response from Fugedi. Ferguson also complained
Welty was not receiving accountings as required.
4
Sale of catalog
Laurie Soriano of King, Holmes, Paterno & Soriano
negotiated a sale of The Offspring’s catalog in 2015 with a
company known as Round Hill Music (Round Hill). Soriano
testified the sale was a “$35 million aggregate transaction.” The
transaction consisted of the master catalog, valued at $20 million,
and the publishing catalog, valued at $15 million. Welty’s
representatives alerted Soriano there were royalties owed to
Welty. Respondents initially calculated Welty was owed
approximately $3 million of the $20 million sale of the master
catalog. A few weeks later a revised calculation was sent,
showing Welty was owed $2,456,521.11. In December 2016,
respondents delivered a payment of $1,282,405.67 to Welty, along
with a letter explaining respondents’ calculations.
PROCEDURAL HISTORY
The complaint
Welty’s September 2020 complaint alleged the following:
First, respondents underpaid him his share of the sale
proceeds from the catalog sale. Respondents wrongly excluded all
proceeds from the sale of the GHLP in their calculation of Welty’s
share and intentionally misallocated proceeds from the sale price
paid by Round Hill as between publishing, recording rights, and
other rights. Further, respondents received forgiveness of at
least $7,981,583.18 in recoupable advances as part of the sale of
the Masters and failed to benefit Welty for the forgiven sum.
Welty also alleged respondents disregarded the SA and the
GHAA and deliberately underpaid him for his share of proceeds
from sales of the GHLP. In addition, respondents received a
substantial payment from Sony resulting from the sale of its
5
equity interest in Spotify and to date had refused to account for
that payment to Welty.
In the first cause of action for breach of contract, Welty
alleged respondents breached the SA and GHAA by failing to
account to Welty, provide third party accounting statements, and
pay Welty his share within 90 days as required. Further,
respondents failed to cause third parties to pay Welty as required
and misallocated sales proceeds.
In the second cause of action for breach of good faith and
fair dealing, Welty alleged there was an implied promise of good
faith and fair dealing, which respondents breached in connection
with both the SA and the GHAA.
In the third cause of action for breach of fiduciary duty,
Welty alleged that in relinquishing his rights in The Offspring
and its business entities, Welty placed his trust and confidence in
respondents who were required to fully and accurately account to
him and pay him in accordance with the terms of the SA and
GHAA.
In the fourth cause of action for constructive fraud, Welty
alleged respondents received accounting statements and
intentionally concealed those statements and the resulting
payments from Welty. In addition, they intentionally
misallocated the weighing of the purchase price for the catalog
sale to artificially increase the price of the purchasing rights,
thus diminishing Welty’s contractual share of the publishing
rights.
In the fifth cause of action for conversion, Welty alleged
respondents received in trust 31 or more accounting statements
and corresponding funds, which respondents wrongfully retained
for themselves. Further, respondents withheld money they were
6
obligated to pay Welty, without his consent, thus exercising
dominion and control over his property.
In the sixth cause of action for accounting, Welty sought a
full and accurate accounting, which he alleged would
demonstrate respondents owed him at least $2,885,775.65 or
more. Welty also sought declaratory relief setting forth the
parties’ respective rights and obligations.
Welty prayed for judgment in the amount of at least
$2,885,775.65 or more in an amount to be determined at trial, for
punitive damages and interest at the legal rate.
Following the filing of this action, Vince Leoni of Miller
Kaplan conducted an accounting. Respondents provided
statements and paid Welty money owed to him.
Discovery and bifurcation
The parties conducted discovery for more than a year before
discovery closed on December 6, 2021. The court set a final
status conference for December 17, 2021, and a trial date of
January 3, 2022. The parties filed witness lists, exhibit lists, and
other trial documents before the December 17, 2021 final status
conference.
In November 2021, respondents filed a motion to bifurcate
trial pursuant to Code of Civil Procedure sections 598 and 1048,
subdivision (b). Regarding matters of contract interpretation,
respondents sought to bifurcate “the parties’ respective rights
and obligations under the [SA], including: (1) how to properly
calculate Welty’s share of the proceeds from Holland,
Wasserman, and Kriesel’s sale of certain master recordings under
Paragraph 3 of the [SA], and (2) whether the payment made to
Welty from that sale ‘should be treated as distributions by a
partnership to a partner, thus necessitating the Offspring
7
Partnership to furnish a Schedule K-1, and not a Form 1099, to
Welty in connection with those payments.’” On December 8,
2021, the trial court granted the motion, expressing its intention
to try the first and third causes of action in the first phase. The
court also noted: “The sixth and seventh causes of action for
accounting and declaratory relief also raise equitable and/or
purely legal claims for the court’s resolution. The equitable
defenses in the answer, including statute of limitations, laches,
and unclean hands would also be tried first.”
Hearing on contract interpretation issues
At the December 17, 2021 status conference, the court
determined it would first decide questions of law regarding the
parties’ contract before conducting trial on other issues. The
court ordered the parties to submit two rounds of briefing on the
legal issues. The hearing was set for January 28, 2022. The
court did not limit the issues to be considered, explaining, “I need
some detail in your respective pretrial reports on this potential
contract ambiguity issue. And who—and what the ambiguities
are. I mean, chapter and verse which clause and which
paragraph. What Plaintiff’s version of the ambiguity is versus
the defense’s version.” In its minute order of December 17, 2021,
the court ordered the parties to “file simultaneous briefs re: legal
issues,” then later to “file simultaneous responses.” The parties
ultimately filed “two rounds of extensive briefing on contract
interpretation.” The court explained, “Welty argue[d] that the
legal question before the Court is ‘narrow.’” The court described
the primary issue laid out by Welty as “whether sales from the
[GHLP] should be included when calculating [Welty’s] share from
the 2016 sale of the band’s catalog to Round Hill.”
8
The SA provided a formula to determine Welty’s share of a
future catalog sale, which required the use of the Test Period
Fraction. In his brief, Welty argued the GHLP should have been
included in the numerator for the Test Period Fraction even
though it did not encompass solely “Masters” as that term was
defined in the SA. Welty argued the GHAA essentially amended
the SA by considering the sole non-Welty master recording on the
GHLP to be a “Master.” Respondents disagreed, arguing the
GHAA did not amend the definition of “Masters” in the SA.
Thus, because the GHLP was not an album “embodying solely
Masters,” it was properly excluded from the numerator in the
Test Period Fraction.
The hearing on the contract interpretation issue was held
on January 28, 2022. The court noted, “both of you appropriately
briefed the case law in California which—and I’m going to
paraphrase it—the Court can provisionally and should maybe
provisionally consider extrinsic evidence to determine if there’s
an ambiguity. . . . If we go down that road, what’s the plaintiff’s
position as to what extrinsic evidence should be provisionally
considered?” Welty’s counsel referenced the evidence included in
their papers, including testimony, e-mails, and other documents
submitted in the record. The court then clarified, “doesn’t the
case law also teach that extrinsic evidence should be considered
only if it occurred either by statements or documents before the
controversy arose?” Welty’s counsel agreed. The court then
stated, “with that additional consideration in mind, what
extrinsic [evidence] do you believe [Welty] has proffered that the
Court should consider?” Welty’s counsel responded, referring to
“emails between the counsel . . . where counsel is conceding that
the GHAA is in fact an amendment to the [SA].” The court asked
9
counsel to clarify what exhibit that was, and Welty’s counsel
informed the court it was exhibit 6. The court then stated,
“Anything else that you believe the Court should provisionally
consider?” Welty’s counsel referenced exhibit 12, which had “the
lead singer, when he is presented with the band manager
calculations showing that Mr. Welty is owed approximately $3
million from the catalog sale, he responds with, ‘. . . we should
have put out another record to skew those records.’” Respondents
took the position there was no material ambiguity in the SA, and
the GHAA did not modify or amend the SA.
The court filed its statement of decision on the contract
interpretation issues on February 8, 2022. The court noted the
parties disagreed as to whether the court needed to consider
extrinsic evidence in resolving the contractual dispute. Welty’s
counsel asked the court to consider Exhibits 6 and 12. The court
described each piece of evidence and stated, “nothing about Ex. 6
and Ex. 12 makes the language in the GHAA ‘reasonably
susceptible’ to Welty’s interpretation of its meaning.” Having
provisionally considered the two exhibits, the court determined
“they will not be admitted on the issue of contract interpretation.”
The court noted that even if admitted, they did not support
Welty’s argument that the GHAA modified the term “Masters” in
the SA.
The court stated, “without clear evidence or further
explanation, the court cannot conclude that the objective intent of
the parties was to fully incorporate and then modify terms in the
[SA].” The court concluded as a matter of law that the GHAA
does not modify the term “Masters” in the SA in the manner
advanced by Welty, nor does the GHAA mention or purport to
modify that definition.
10
Welty filed objections to the court’s decision, which the
court overruled. Welty’s counsel argued the court did not
consider all of his extrinsic evidence, “including all testimony, e-
mails and other documents submitted in the record.” The court
responded it “trust[ed] [counsel] as to which particular exhibits,”
and “when I instructed . . . that the only two that you were
relying on were 6 and 12, you did not object or in your closing
comments make a further comment.” The court stated, “the
transcript clearly shows that based on the court’s specific
questions to plaintiff’s counsel, the proffer of extrinsic evidence
was narrowed to two exhibits only upon which this court ruled in
its statement of decision.”
Status conference; motion to reopen discovery
A status conference was held on May 5, 2022. The court
proposed a bench trial on the accounting and declaratory relief
claims dealing with Welty’s position that respondents falsely
increased the value of the publishing side of the catalog sale and
there were unpaid or underpaid outstanding royalties, among
other things. The court also mentioned respondents’ intent to
seek summary adjudication (MSA) on the second through fifth
causes of action, and stated, “depending on the outcome of that,
we would determine what issues remain, if any, for a potential
jury trial.” Welty’s counsel objected on grounds the time to file
an MSA had passed. The court disagreed that an MSA was
untimely, explaining, “after we vacated the first trial date and we
haven’t formally set even a new trial date on a bifurcated portion,
the court has discretion to allow for a summary judgment motion
that is properly noticed.” The date of August 17, 2022, was
reserved for the hearing on the MSA, and the court set
11
October 10, 2022, as the trial date on the sixth and seventh
causes of action.
On May 11, 2022, respondents provided Welty with a
redacted copy of the SA, which was apparently provided to Round
Hill during negotiations for the purchase of The Offspring’s
master catalog. Welty’s counsel sought further information
regarding the context in which the redacted agreement was
shared from respondents’ counsel. Welty’s counsel thereafter
filed a motion to either reopen discovery, or to confirm discovery
was still open. Counsel also requested to withdraw from the
case.4
On August 1, 2022, Welty’s motion to reopen discovery was
heard and denied.
MSA
On June 3, 2022, respondents filed an MSA to the first five
causes of action. As to the first cause of action for breach of
contract, respondents argued since the trial court determined
Welty’s interpretation of the contract was incorrect, Welty’s
breach of contract claim failed as a matter of law. As to the
second cause of action (breach of the implied covenant of good
faith and fair dealing), respondents argued the acts Welty
complained of were specifically permitted by the agreement,
therefore could not constitute a breach of the implied covenant as
a matter of law, setting forth in detail the acts complained of and
the reasons such acts were authorized under the agreement. As
to the third cause of action (breach of fiduciary duty),
respondents argued Welty could not establish the existence of a
fiduciary relationship as a matter of law. As to the fourth cause
4 On August 4, 2022, Welty substituted new counsel.
12
of action (constructive fraud), respondents argued Welty could
not, as a matter of law, establish the existence of a fiduciary or
confidential relationship between the parties—a required
element of the cause of action. Finally, as to the fifth cause of
action (conversion), respondents argued failure to make a
contractually required payment is insufficient basis for a cause of
action for conversion as a matter of law.
On August 25, 2022, after briefing and oral argument, the
trial court filed a written order granting respondents’ MSA in
part. The court granted summary adjudication as to breach of
contract based on the master catalog sale, breach of fiduciary
duty, constructive fraud, and conversion.
As to the breach of contract claim based on the sale of the
master catalog, the trial court explained, “as [respondents] argue,
the Court has ruled that [Welty’s] interpretation of the GHAA
and [SA] was wrong. Further, [respondents] have provided the
declaration of attorney Paterno and his calculation of the amount
due [to Welty]. [Welty] has not objected to Paterno’s testimony
and otherwise has no admissible evidence that Paterno’s
calculation is incorrect.” The trial court further clarified Welty
could not at that late time “raise new legal theories which
purportedly support his claim of underpayment on the Round
Hill deal.” Thus, there were no triable issues of material fact as
to this issue. The court specified that summary adjudication was
granted as to breach of contract “solely on the theory that [Welty]
was underpaid on the Round Hill deal and is otherwise denied as
to [Welty’s] additional theories in the first cause of action.”
As to breach of the implied covenant of good faith and fair
dealing, the trial court denied summary adjudication, noting
Welty’s complaint alleged respondents “failed properly to account
13
for and then pay [Welty] his fair share of royalty payments from
third parties.” Respondents did not address this issue in their
MSA, therefore summary adjudication was denied.
As to breach of fiduciary duty and constructive fraud, the
trial court granted summary adjudication, noting Welty failed to
address “the relevant cases which hold that a contractual
relationship, even one where there is a contingent future
compensation agreement, does not give rise to a fiduciary
relationship.”
Summary adjudication was also granted as to conversion.
The court noted Welty’s arguments and “one case authority” were
not persuasive.
Pretrial proceedings
At the September 30, 2022 final status conference, the
court noted the upcoming trial dealt with the sixth and seventh
causes of action for accounting and declaratory relief, and various
affirmative defenses. The court clarified its ruling on the MSA
prohibited Welty from producing any evidence at trial related to
the catalog sale issue, noting Welty provided no competing
calculation opposing respondents’ calculation at the time of the
MSA: “having ruled on the breach of contract issue, solely with
respect to the 2015 catalog sale, that’s off the table for a trial and
for the accounting. And if it wasn’t clear to the parties at that
time, the accounting and dec [sic] relief actions will go forward on
your so-called third-party issues, not the Round Hill sale.”
On October 4, 2022, Welty filed a motion to file a first
amended complaint purporting to add new theories regarding the
2015 catalog sale. The motion was to be heard on the date set for
commencement of the bench trial. Respondents opposed the
motion as untimely, prejudicial, and Welty failed to assert these
14
theories prior to the hearing on the catalog sale contract
interpretation issue in January 2022.
At the October 17, 2022 hearing, the trial court denied
Welty’s motion to amend the complaint, as the issue “was
resolved via the briefing and the court’s ruling” on January 28,
2022. In response to Welty’s counsel’s comments that the
briefing was restricted to the Test Period Fraction issue, the
court noted, “I did not constrain . . . briefing at all.” “I’m going to
stick with the ruling that I think I made several times now as to
the limitations of what this phase one trial will be about.”
Bench trial and decision
The five-day bench trial commenced on October 17, 2022.
Welty called 12 witnesses and respondents called one. Fifty-four
exhibits were entered into evidence. The parties filed posttrial
briefs and closing arguments were heard on December 22, 2022.
On January 12, 2023, the trial court issued a written
statement of decision on the phase 1 trial, rejecting Welty’s claim
the 2015 catalog sale was designed to deprive him of his fair
share. The court found Welty did not meet his burden of proof on
this issue, providing “no evidence, only speculation, that the asset
purchases by Round Hill were designed to deprive him of his ‘fair
share.’ Welty introduced no testimony to support his theory.” On
the contrary, extensive evidence established the deal was
structured in accordance with industry standards.
As to the claim of breach of implied covenant of good faith
and fair dealing, the court noted various contractual provisions
gave respondents sole discretion to make decisions regarding the
catalog, and the Masters, without Welty’s consent. The court
noted, “In sum, under the clear terms of the SA . . . the band had
unfettered discretion to not sell the [M]asters, to sell them for
15
$1.00 or, as here, to sell them for $20 million at the same time
Holland sold his publishing catalog for $15 million. Welty
retained no right to be heard on or to contest the band’s decision,
he retained no right to share in the $15 million sale of the
publishing catalog and, as a matter of law, he has no recourse
under a theory of breach of the implied covenant.”
The court also found against Welty on theories he was owed
royalties from third parties. Certain claims were barred by the
parties’ “agreed-upon three year statute of limitations.” The
court found the evidence did not support Welty’s claims he was
underpaid from SoundExchange or Sony, nor did Welty prove
that he was damaged as to off-statement royalties. As a result of
these findings, Welty’s request for prejudgment interest as to
SoundExchange, Sony and off-statement royalties was also
rejected.
Respondents were the prevailing parties in the phase 1
trial.
Hearing on remaining issues
On February 28, 2023, the court held a hearing on whether
substantive issues remained. Welty requested a phase 2 trial on
two issues: one dealing with breach of the covenant of good faith
and fair dealing, which the trial court felt had been thoroughly
addressed, and a second issue related to various alleged breaches
of the SA. The court again stated its position there was nothing
left to resolve on these issues, but permitted Welty to argue
otherwise.
The court then denied Welty’s request for a phase 2 trial.
Final statement of decision
On March 6, 2023, the court entered a final statement of
decision that addressed Welty’s claims for royalties, his claim he
16
was entitled to a share of the $15 million Round Hill paid to
Holland for his publishing catalog, and the affirmative defenses
of statute of limitations, laches and waiver.
The court determined Welty did not meet his burden of
proof regarding his contentions, and there were no remaining
issues to be tried in a phase 2 proceeding. Accordingly, judgment
was entered in favor of respondents.
Attorney fees and costs
Respondents sought attorney fees and costs based on a
provision in the SA entitling the prevailing party to attorney fees.
On July 7, 2023, the trial court issued a written ruling
granting respondents’ motion for attorney fees. After considering
the arguments of the parties, the court awarded respondents,
except Kriesel, $724,947 in attorney fees and $20,013 in expert
costs. Kriesel was awarded $131,871 in attorney fees.
An amended judgment reflecting the fee award was issued
August 22, 2023.
Appeal
Welty filed his notice of appeal from the judgment on
April 28, 2023. On September 6, 2023, he filed his notice of
appeal from the amended judgment including the award of
attorney fees and costs.
Thereafter, Welty’s motion to consolidate the two appeals
was granted by this court.
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DISCUSSION
I. Contract interpretation proceedings5
Welty first addresses the court’s February 8, 2022 decision
on the contract interpretation issues, arguing the court erred in
failing to follow principles of contract interpretation. Welty
characterizes the court’s actions as a refusal to consider extrinsic
evidence at all, even provisionally, and takes the position the
court “simply did not mention [Welty’s] evidence, then excluded
and refused to consider Welty’s evidence.” Welty argues these
alleged errors resulted in severe prejudice to him.
The record does not support Welty’s claims the court failed
to follow proper principles of contract interpretation. Instead, the
court specifically outlined the process of contractual
interpretation, explaining, “the Court can provisionally and
should maybe provisionally consider extrinsic evidence to
determine if there’s an ambiguity.” The court then asked Welty’s
counsel, “If we go down that road, what’s the plaintiff’s position
as to what extrinsic evidence should be provisionally considered?”
Welty’s counsel made a general reference to evidence included in
their papers, including testimony, e-mails, and other documents
submitted in the record. Welty’s counsel was then pressed to
specify “what extrinsic evidence do you believe [Welty] has
proffered that the Court should consider?” Welty’s counsel
referenced exhibit 6. The court then asked, “Anything else that
you believe the Court should provisionally consider?” Welty’s
counsel referenced exhibit 12.
5 Welty organizes his brief in order of proceedings, raising
challenges at each phase of litigation. We address his claims in
the same order.
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The court’s written order outlines the process of
consideration of extrinsic evidence in interpreting contracts,
explaining: “First, the trial court preliminarily examines the
proffered evidence to see if it is fairly susceptible of one of the
interpretations advanced. If so, the evidence is then admissible.
However, extrinsic evidence is not admissible to alter the terms
of a written contract.” (Citing Oakland-Alameda County
Coliseum, Inc. v. Oakland Raiders, Ltd. (1988) 197 Cal.App.3d
1049, 1058.)
The court proceeded to evaluate the two exhibits
specifically mentioned, concluding neither exhibit made the
language in the GHAA reasonably susceptible to Welty’s
interpretation. The court concluded its provisional consideration
by stating, “Even if these exhibits were admitted, they would not
support Welty’s argument that the GHAA modified the term
‘Masters’ in the [SA] for the reasons set forth above.” Welty does
not challenge the court’s analysis nor provide any explanation as
to how such evidence made the agreements reasonably
susceptible to his interpretation.6
Welty argues he never narrowed, withdrew, or waived any
evidence. However, the court made it clear it was going to
consider extrinsic evidence “only if it occurred either by
statements or documents before the controversy arose.” Welty’s
6 We decline to address Welty’s argument made for the first
time in his reply brief that the plain language of the SA supports
Welty’s interpretation. (Simpson v. The Kroger Corp. (2013) 219
Cal.App.4th 1352, 1370 [“Raising a new theory in a reply brief is
improper and unfair . . . . We may decline to consider an
argument raised for the first time in a reply brief if no good
reason is demonstrated for the delay in raising the point.”].)
19
counsel agreed with the court’s approach, stating, “That’s correct.
That is to be given more weight as opposed to sort of post hoc
rationalization.” The court then made it clear it was narrowing
the scope of extrinsic evidence to be considered, saying, “So with
that additional consideration in mind, what extrinsic [evidence]
do you believe plaintiff has proffered that the Court should
consider?” Rather than objecting to the court’s narrowed range of
evidence to be considered, Welty’s counsel proceeded to describe
exhibits 6 and 12.
Welty now argues he later clarified his position was that all
extrinsic evidence should be considered, including “all testimony,
e-mails and other documents submitted in the record.” The court
explained, “That, of course, was your starting point . . . . And I
trust you as to which particular exhibits, and you did that. And
then later, as the opposing side points out, when I instructed
them that the only two that you were relying on were 6 and 12,
you did not object or in your closing comments make a further
comment.” The court concluded, “the transcript clearly shows
that based on the court’s specific questions to plaintiff’s counsel,
the proffer of extrinsic evidence was narrowed to two exhibits
only upon which this court ruled in its statement of decision.” At
no time during the hearing did Welty’s counsel raise additional
specific items of evidence for the trial court to consider.
The trial court did not err in focusing its review on the two
exhibits Welty identified. The court was not required to review
“all testimony, e-mails and other documents” in the record
without guidance from Welty as to the significance of such
evidence in supporting his position. On appeal, Welty attempts
to correct this omission, pointing to evidence in the record that he
claims shows that during the formation of the GHAA,
20
respondents’ lawyers interpreted the GHAA in a way similar to
Welty and showing respondents’ lawyers continually diminishing
the amount owed to Welty. Welty fails to provide a citation to the
record showing he alerted the court to these specific items of
evidence.
Further, Welty fails to explain how the items of evidence he
points to support his theory that the GHAA was meant to modify
the meaning of the term “Masters” in the SA. Thus, Welty fails
to establish the trial court’s failure to provisionally consider the
specific evidence referenced on appeal was prejudicial error.
We decline to find reversible error based on the court’s
procedure for contractual interpretation. Even if Welty has not
forfeited this claim of error, or invited error by failing to direct
the court’s attention to the exhibits he now raises, he has failed
to show that any such error was prejudicial. (Cal. Const., art. VI,
§ 13; Robert v. Stanford University (2014) 224 Cal.App.4th 67, 72
[“we may not reverse a judgment in the absence of a showing of
prejudice”].)
II. MSA proceedings
A. Permitting the MSA
Welty first argues the trial court abused its discretion and
violated Welty’s due process rights when it permitted
respondents to file the MSA after hearing the bifurcated contract
interpretation issue.
Welty argues that the MSA was unauthorized due to its
timing. Code of Civil Procedure section 437c, subdivision (a)(3)
requires “[t]he motion shall be heard no later than 30 days before
the date of trial, unless the court for good cause orders
otherwise.” Welty argues that trial commenced in January 2022
when the trial court heard the bifurcated contract interpretation
21
issue. Welty asserts there is no authority for approval of an MSA
after the court has started trial, even a bifurcated trial. At no
time did the court make any findings of good cause for an MSA to
be filed. Thus, Welty argues, the MSA was procedurally
unauthorized.
The record shows the trial date was initially set for
January 3, 2022. At the December 17, 2021 status conference,
that trial date was vacated, and the court set “Oral Argument Re
Legal Issues” for January 28, 2022. At a May 5, 2022 status
conference, the court set respondents’ MSA for hearing on
August 17, 2022; a final status conference for September 30,
2022; and a bench trial on Welty’s causes of action 6 and 7 for
October 10, 2022.
The parties argue whether trial had technically begun at
the time the court allowed the MSA. However, Code of Civil
Procedure section 437c, subdivision (a)(3) gives trial courts the
discretion to hear a motion for summary adjudication for good
cause even where “30 days before the date of trial” has passed.
Appellant argues the trial court in this matter never made an
explicit finding of good cause. However, this court may infer from
the record such an implicit finding of good cause. (Fladeboe v.
American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 58 [“The
doctrine of implied findings requires the appellate court to infer
the trial court made all factual findings necessary to support the
judgment.”]; see also North Carolina Dairy Foundation, Inc. v.
Foremost-McKesson, Inc. (1979) 92 Cal.App.3d 98, 104.) A court
need not always use the particular words “good cause” in making
a finding of good cause. (See, e.g., In re Marriage of Leonard
(2004) 119 Cal.App.4th 546, 561 [“While desirable, we do not
22
believe that the statute requires the incantation of the particular
words ‘good cause,’ . . . .”].)
At the May 5, 2022 status conference, Welty’s counsel
argued, “I think the deadline for [an MSA] of those claims has
passed because it’s tied to the initial trial date.” The court
responded it had discretion to hear an MSA because “we vacated
the first trial date and we haven’t formally set even a new trial
date on a bifurcated portion.” Thus, the court concluded it had
discretion to allow an MSA as long as it was properly noticed.
The court later noted it had a “duty in managing the individual
cases on this court’s docket . . . to determine whether or not there
are justiciable claims and whether or not those claims are barred
by some theory or other.” The court thus made an implicit
determination that, regardless of how the January 2022 hearing
is characterized, there was good cause to allow the MSA in order
to potentially eliminate certain legal issues from trial. This is the
purpose of the summary judgment law. (Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 843 [purpose of summary
judgment law “is to provide courts with a mechanism to cut
through the parties’ pleadings in order to determine whether,
despite their allegations, trial is in fact necessary to resolve their
dispute”].) Given the trial court record, we find the court made
an implied finding of good cause to permit the MSA following the
hearing on the contract interpretation issues in order to
streamline the issues for trial.7
7 Welty’s authorities on this issue do not contradict our
decision here. Urshan v. Musicians’ Credit Union (2004) 120
Cal.App.4th 758, 764, agrees that “a trial court has discretion to
shorten the 30-day period in which a motion for summary
judgment must be heard before trial where circumstances
23
Because the trial court made an implicit finding of good
cause, we decline to address the parties’ arguments whether trial
had technically begun. The court articulated good cause to hear
the motion, and we decline to disturb its discretion.
B. Denial of additional discovery
Welty next argues the trial court abused its discretion by
twice denying Welty’s requests for additional discovery.
On May 11, 2022, respondents produced a new document, a
heavily redacted copy of the SA, which respondents had provided
to Round Hill in connection with the catalog sale. Welty filed a
motion to reopen discovery, or confirm discovery was still open,
seeking “additional information related to the facts and
circumstances surrounding the redacted agreement, why it was
produced to Round Hill in redacted form instead of as a whole,
and the reasoning for the specific redactions made.” Respondents
warrant.” And in Robinson v. Woods (2008) 168 Cal.App.4th
1258, the plaintiffs opposed a motion for summary judgment
solely on notice grounds. The hearing was set prior to 80 days
after service by mail and within 30 days of trial with no showing
of good cause. (Id. at p. 1260.) The court resolved the issue by
continuing the hearing by four days and ruling, at the summary
judgment hearing, that there had been good cause. The Court of
Appeal found that “[t]he four-day continuance was a violation of
due process and an abuse of discretion,” since the notice period
had begun anew. (Id. at p. 1268.) In addition, the trial court did
not find good cause for violation of the 30-day rule until the
parties returned to court for the summary judgment hearing.
(Ibid..) Under those circumstances, reversal was required. Here,
in contrast, the court made its implicit finding of good cause over
three months prior to the hearing on the MSA and prior to the
filing of the MSA on June 3, 2022.
24
objected to the motion, arguing discovery had been closed for
seven months; Welty had not established that any of the
requested discovery was necessary; and had not established that
he had diligently pursued such discovery.8 On August 1, 2022,
the trial court denied Welty’s motion.
Under Code of Civil Procedure section 437c, subdivision (h),
Welty renewed his request in his opposition to the MSA along
with declarations and document requests. The declarations and
document requests were excluded. The trial court sustained
respondents’ objection that the portion of the declaration related
to discovery “seeks improper reconsideration of the Court’s
August 1, 2022 Order denying Mr. Welty’s motion to reopen
discovery.” Respondents’ sustained objection to the declaration
also outlined the requirements of Code of Civil Procedure section
437c, subdivision (h) to reopen discovery and asserted that Welty
had failed to meet those requirements. The court sustained
respondents’ objection to Welty’s third set of requests for
production as they were served roughly seven months after
discovery closed.
The decision to grant or deny a motion to reopen discovery
is within the discretion of the trial court. (Cottini v. Enloe
8 Code of Civil Procedure section 2024.050, subdivision (b)
permits a court to grant a motion to reopen discovery upon
consideration of (1) the necessity and the reasons for the
discovery; (2) the diligence or lack of diligence of the party
seeking the discovery; (3) any likelihood that permitting the
discovery will prevent the case from going to trial on the date set;
and (4) the length of time that has elapsed between any date
previously set, and the date presently set, for the trial of the
action.
25
Medical Center (2014) 226 Cal.App.4th 401, 418.) It is
appellant’s burden on appeal to show an abuse of discretion.
(Sanchez v. Kern Emergency Medical Transportation Corp. (2017)
8 Cal.App.5th 146, 154.) Welty fails to articulate an abuse of
discretion in the trial court’s order. He points out that a party’s
inability to obtain discovery may constitute good cause to grant a
continuance. He further argues there was no question as to his
diligence as he had no reason to make the request for additional
discovery until the belated production. He declines to address
other pertinent factors, and therefore has failed to show an abuse
of the trial court’s discretion in declining to permit additional
discovery.9
C. Exclusion of evidence
Welty next contends the trial court abused its discretion in
sustaining respondents’ objections to much of Welty’s evidence
opposing the MSA. Welty largely fails to address specific
evidentiary objections or explain why the specific evidentiary
objections were inapplicable. He makes no legal argument
regarding many of the objections respondents made and whether
the court properly ruled on those objections. Welty has waived
9 Denton v. City and County of San Francisco (2017) 16
Cal.App.5th 779, 791, cited for the first time in Welty’s reply
brief, is distinguishable as the defendants refused to recognize a
previous settlement after the plaintiff had discharged his
attorney. The plaintiff was “surprised that the summary
[judgment] motion was being heard on that date and he needed
additional time to seek new counsel to help oppose the motion if
he could not settle.” (Id. at p. 792.) This was not the position
that Welty was in when he sought additional discovery in this
matter.
26
any objections to the court’s evidentiary rulings where he has
failed to provide detailed argument concerning the grounds for
exclusion of evidence and the reason such grounds were
incorrect.10 (Brown v. El Dorado Union High School Dist. (2022)
76 Cal.App.5th 1003, 1022 [“‘“[E]very brief should contain a legal
argument with citation of authorities on the points made. If none
is furnished on a particular point, the court may treat it as
waived, and pass it without consideration.”’”].)
1. Opposition papers
Welty argues the trial court erred in striking his separate
statement. However, Welty fails to point to a citation in the
record showing his separate statement was stricken. Instead, the
record shows the trial court considered Welty’s separate
statement, but concluded it failed to raise disputed issues of
material fact due to its reliance on improper objections,
arguments, and inadmissible evidence.11 As to the catalog sale
issue, Welty failed to object to respondents’ evidence concerning
the amount due to Welty and failed to provide admissible
evidence that respondents’ calculation was incorrect.
The trial court noted Welty admitted his opposing separate
statement and additional material facts were irrelevant because
10 Welty’s specific arguments regarding the report of Leoni,
course of performance evidence, and intent of the parties are
discussed in more detail below.
11 The court noted Code of Civil Procedure section 437c,
subdivision (b)(3) permits a trial court to grant a motion for
summary adjudication where the opposition fails to comply with
the requirements of the statute, including failure to reference
supporting evidence. However, the court did not appear to rely
on this provision in granting the MSA.
27
Welty’s opposition brief completely failed to reference those
documents. Welty admits the opposing brief cited evidence,
rather than citing the separate statement, but argues a trial
court does not have the discretion to enter a judgment against a
party solely as a result of that party’s provision of a defective
separate statement. (Citing Parkview Villas Assn., Inc. v. State
Farm Fire & Casualty Co. (2005) 133 Cal.App.4th 1197, 1215.)
The court’s order shows it did not grant the MSA solely on the
ground of Welty’s deficient separate statement. Rather, the trial
court granted the MSA on the contract interpretation issue
because it found Welty did not raise a triable issue of material
fact as to the breach of contract claim regarding the catalog
sale.12 Under the circumstances, we decline to find error.
12 The trial court expressed its frustration at the
noncompliant papers at the hearing, stating, “summary judgment
jurisprudence is pretty particular, and the requirements are
pretty stringent, and it’s designed as a mechanism for the court
to cut through the pleadings to determine whether or not there
are genuine and material triable issues. So that shows the
importance of a separate statement, the tendering of admissible
evidence, the referral of the evidence in the referral to the
relevant evidence in the points and authorities, so the court
doesn’t have to do the work of a party or parties and try to figure
out where in a two-inch stack of documents there may be
evidence that properly raises a material issue of fact. That’s not
the court’s function.” At that time, Welty’s counsel requested
that the court refrain from ruling on the MSA until after the trial
of the accounting claim, which the court denied. Welty’s counsel
did not deny the opposition papers were noncompliant, nor make
any legal argument that the court should not consider the
technical errors in the papers.
28
2. Report of Vince Leoni
Leoni was Welty’s designated expert, and his report was
submitted in support of Welty’s opposition to respondents’ MSA.
In his declaration filed in support of the opposition to the MSA,
Welty’s attorney attested that the attached document was “a true
and correct copy of the Expert Report of designated expert
Vincent Leoni produced in this action.” The report did not
include Leoni’s name anywhere, but was written on the
letterhead of “Miller Kaplan.” The report “included an analysis of
the various royalty streams the Offspring is contractually
obligated to account to Welty as well as the calculation of Welty’s
share of the sale of the recorded masters of the Offspring.” The
report concluded that such accountings and proceeds were not
properly calculated according to the terms of the SA.
Respondents objected to the admission of the report on the
ground it was inadmissible hearsay under Evidence Code section
1200, lacked foundation under Evidence Code section 403, and
constituted an improper expert opinion under Evidence Code
sections 720 and 801. Respondents elaborated on these
objections, explaining, “This supposed expert report is not signed
and not certified under penalty of perjury. [Citation.] [¶] Its
author is also not identified, nor are his or her qualifications to
provide expert testimony. [¶] No foundation is laid for any of the
information in the attached schedules.” The trial court sustained
respondents’ objections.
At the hearing, Welty’s counsel offered to have Leoni cure
the defect and provide a declaration, so it could provide a triable
issue of material fact on the first issue concerning the Test Period
Fraction. The trial court responded, “an oral request to
supplement the papers at this late date is just really a
29
nonstarter.” Welty’s counsel suggested the matter was a
technical issue, but the trial court disagreed, stating “it’s not
technical because the question is, is there a material issue of
fact.” The court then redirected counsel to point out the material
disputed issues of fact.
On appeal, Welty addresses only respondents’ objection
that Leoni’s report was not signed under penalty of perjury,
claiming this objection was not legitimate. Welty argues
respondents had also referenced Leoni’s report, and the trial
court made reference to utilizing Leoni’s testimony in the future.
Welty argues Leoni’s report was not a surprise. Welty’s
argument does not convince us that the trial court abused its
discretion in sustaining respondents’ objections to the report
during the MSA proceedings. Welty fails to address the other
two objections or to address any of the specific Evidence Code
sections cited. Welty provides no legal authority suggesting the
trial court abused its discretion in not permitting Welty an
opportunity, at the time of the MSA hearing, to cure the defects
in Leoni’s report.
Welty cites Elkins v. Superior Court (2007) 41 Cal.4th
1337, 1364, footnote 16, for the proposition that “[t]erminating
sanctions such as an order granting summary judgment based
upon procedural error ‘“have been held to be an abuse of
discretion unless the party’s violation of the procedural rule was
willful [citations] or, if not willful, at least preceded by a history
of abuse of pretrial procedures, or a showing [that] less severe
sanctions would not produce compliance with the procedural
rule.”’” Elkins involved a trial court that excluded the bulk of a
litigant’s evidence for noncompliance with the court’s scheduling
order. The Supreme court concluded, “the trial court abused its
30
discretion in sanctioning petitioner by excluding the bulk of his
evidence simply because he failed, prior to trial, to file a
declaration establishing the admissibility of his trial evidence.
The sanction was disproportionate and inconsistent with the
policy favoring determination of cases on their merits.” (Id. at
pp. 1363-1364.)
Here, Welty is challenging the sustaining of an objection to
a single piece of evidence. The objections were sustained on three
grounds that Welty fails to address. He has not shown
respondents’ MSA was granted on the first issue solely because
this report was excluded. In sum, the suggestion the
inadmissibility of Leoni’s report was equivalent to terminating
sanctions is not supported on this record. Welty has failed to
show the trial court abused its discretion in excluding the report
and fails to show prejudice from the exclusion.
3. Course of performance evidence
Welty argues the trial court excluded evidence of course of
performance prior to the time disputes arose. However, it is
unclear what specific evidence Welty is referring to or what legal
arguments he makes regarding the specific Evidence Code
sections under which the objections were sustained.
Welty first complains the trial court sustained respondents’
objection to his offering of a letter from Attorney Paterno.
However, the reference to the Paterno letter is contained in a
lengthy paragraph to which respondents objected on six different
grounds. Welty fails to address these legal grounds for exclusion
of evidence. Instead, he complains the trial court admitted the
same document when offered by respondents. Welty does not
contest the trial court’s justification that Welty had not objected
to it. Under the circumstances, we have no basis to find the trial
31
court abused its discretion in sustaining respondents’ objections
to this portion of Welty’s evidence.
Welty argues he sought to refer to the Paterno declaration
to show it conflicted with prior performance and course of
dealing. He provides a citation to two pages of Welty’s
declaration, but fails to explain the basis for the court’s decision
to sustain respondents’ objections to these pages, nor does he
provide legal argument refuting such bases. Instead, Welty
appears to take the position the court simply erred in excluding
this evidence because it was relevant. Welty cites Walter E.
Heller Western, Inc. v. Tecrim Corp. (1987) 196 Cal.App.3d 149,
158, for the proposition that “parol evidence is admissible to aid
in interpreting the agreement, thereby presenting a question of
fact which precludes summary judgment if the evidence is
contradictory.” Welty fails to provide a citation to the record
showing that any specific course of performance evidence was
excluded solely on the grounds of relevance. He has failed to
show an abuse of discretion.
4. Intent of the parties
The last category of evidence Welty raises is evidence of
intent of the parties. Again, he argues such evidence was
relevant, citing Piedmont Capital Management, L.L.C. v.
McElfish (2023) 94 Cal.App.5th 961, 969, for the proposition that
the court was not free to disregard extrinsic evidence of the
parties’ intent in interpreting a contract. Welty also relies on
Wolf v. Superior Court (2004) 114 Cal.App.4th 1343, 1359, in
which summary judgment was reversed in part because triable
issues of fact remained concerning a certain contractual term.
Neither case assists Welty’s argument. Again, Welty refers to
portions of two declarations, but fails to discuss—or provide
32
citations to the record showing—the specific Evidence Code
sections supporting exclusion of this evidence and making legal
arguments refuting such reasoning. He has failed to show an
abuse of discretion in the trial court’s exclusion of any specific
evidence.
D. Grounds for grant of MSA
Welty argues the trial court granted the MSA on grounds
that were not contained in the notice, as respondents moved for
summary adjudication of the entire claim for “breach of contract
based on an alleged underpayment from the band’s 2015 catalog
sale because it is based on an erroneous interpretation of the
contract”; however, respondents’ supporting brief and separate
statement addressed only the Test Period Fraction issue. Welty
argues the trial court’s decision to grant summary adjudication
“solely on the theory that [Welty] was underpaid on the Round
Hill deal” was impermissible, as it represented a single item of
compensatory damage.
Welty cites DeCastro West Chodorow & Burns, Inc. v.
Superior Court (1996) 47 Cal.App.4th 410, 422, for the
proposition that “Code of Civil Procedure section 437c,
subdivision (f)(1), does not permit summary adjudication of a
single item of compensatory damage which does not dispose of an
entire cause of action.” DeCastro involved summary adjudication
of a single item of compensatory damages stemming from a legal
malpractice claim. The present matter is distinguishable. It does
not involve a single item of damages, but a contractual theory of
recovery. As the trial court noted, “under subdivision (f) of
section 437c, a party may present a motion for summary
adjudication challenging a separate and distinct wrongful act
even though combined with other wrongful acts alleged in the
33
same cause of action.” (Lilienthal & Fowler v. Superior Court
(1993) 12 Cal.App.4th 1848, 1854-1855 (Lilienthal); see Blue
Mountain Enterprises, LLC v. Owen (2022) 74 Cal.App.5th 537,
549 [“to the extent the FAC’s first cause of action alleged
separate and distinct contractual violations, Blue Mountain was
entitled to present a motion for summary adjudication as to any
alleged violation”].)
Welty cites Bagley v. TRW, Inc. (1999) 73 Cal.App.4th 1092,
1094, footnote 2, which questioned whether the Lilienthal court
properly interpreted Code of Civil Procedure section 437c,
subdivision (f)(1) in light of subsequent statutory amendments.
In Bagley, a defendant moved for summary adjudication of 130
“issues” attacking the plaintiff’s seven causes of action. (Bagley,
supra, at p. 1093.) However, the question of whether the 130-
issue motion for summary adjudication was permissible was not
before the Bagley court, therefore we are not persuaded by the
dicta in the footnote cited.13
13 Skrbina v. Fleming Companies (1996) 45 Cal.App.4th 1353,
1364, also does not convince us the MSA in this matter was
inappropriate. The Skrbina court noted that “if a plaintiff states
several purported causes of action which allege an invasion of the
same primary right he has actually stated only one cause of
action. On the other hand, if a plaintiff alleges that the
defendant’s single wrongful act invaded two different primary
rights, he has stated two causes of action, and this is so even
though the two invasions are pleaded in a single count of the
complaint.” (Ibid.) Here, Welty stated several different acts
supporting his breach of contract cause of action. The trial court
did not err in treating the Test Period Fraction issue as a distinct
issue appropriate for summary adjudication.
34
E. Breach of fiduciary duty/conversion claims
Welty challenges the trial court’s decision to grant
respondents’ MSA on his breach of fiduciary duty and conversion
claims on substantive legal grounds.
While acknowledging Wolf v. Superior Court (2003) 107
Cal.App.4th 25, 30-31, which held “the contractual right to
contingent compensation in the control of another has never, by
itself, been sufficient to create a fiduciary relationship . . . ,”
Welty requests we consider Justice Johnson’s concurrence in the
matter. Welty fails to elaborate on how the concurrence assists
his claim or provide any reasoned analysis of the case. We
therefore decline to consider the concurrence. Welty cites Stevens
v. Marco (1956) 147 Cal.App.2d 357 and Schaake v. Eagle
Automatic Can Co. (1902) 135 Cal. 472 as cases involving
royalties that permitted claims for breach of fiduciary duty.
However, again Welty provides no analysis of the cases or legal
argument. We therefore again decline to find error in the trial
court’s decision.
As to the conversion claim, Welty argues it was improperly
dismissed solely on the pleadings. The record reveals otherwise,
as Welty had the opportunity to present evidence in support of
the conversion claim in opposition to the MSA. Welty complains
his evidence in support of his conversion claim was excluded, but
fails to challenge any specific evidentiary rulings. Welty cites no
legal authority.14 Under the circumstances, we decline to find
substantive error in the trial court’s ruling.
14 For the first time in his reply brief, Welty cites Fong v. East
West Bank (2018) 19 Cal.App.5th 224, 231, quoting Welco
Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 209, for the
proposition that “‘[m]oney may be the subject of conversion if the
35
III. Catalog sale claims
Welty argues the trial court dismissed certain of his catalog
sale claims sua sponte. He argues respondents did not request
summary adjudication of any of his contract claims other than
the Test Period Fraction issue. Welty adds he had no notice that
respondents were seeking summary adjudication of the catalog
sale claims as they related to his other claims, including breach
of contract, accounting, breach of the implied covenant of good
faith and fair dealing, and declaratory relief. Thus, Welty
argues, the court lacked authority to grant summary adjudication
of catalog sale claims other than the Test Period Fraction issue.
Welty cites Moore v. California Minerals Products Corp. (1953)
115 Cal.App.2d 834, 836, for the proposition that dismissing a
party’s claims without notice or request from another party is a
form of structural error that is per se reversible.
This record does not indicate the court dismissed any
causes of action sua sponte nor granted summary judgment on
any claims not raised by respondents. Welty makes a general
citation to the September 30, 2022 conference, but fails to provide
page citations supporting his position his claims were dismissed.
The September 30, 2022 hearing was a pretrial conference at
which the court reviewed pretrial briefs and a joint witness list.
The court addressed Welty’s argument that his claim he was
underpaid on the catalog sale “is still alive in two of the equitable
claims, via declaratory relief and the accounting claim,” by
claim involves a specific, identifiable sum.’” The case does not
address the court’s rationale for granting summary adjudication
on the conversion claim, nor did Welty’s myriad claims amount to
a specific sum.
36
disagreeing the Test Period Fraction issue could form the basis
for these two causes of action because “[a]ccounting has to be
tethered to something. There has to be some relationship or duty
as between the parties. We don’t have accounting trials when
there is no basis for the breach for the allegation of duty.”
Welty’s counsel disagreed to the scope of the MSA, to which
the court responded, “Issue No. 1 in the motion for summary
adjudication was, and I quote: [Respondents] are entitled to
summary adjudication of Welty’s First Cause of Action for breach
of contract based on an alleged underpayment from the band’s
2015 catalog sale because it is based on an erroneous
interpretation of the contract, and therefore Welty cannot
establish the essential element of breach as a matter of law . . . .”
The court concluded, “I determined that there were not triable
issues of fact, for a variety of reasons, and that the defendants
were entitled on this precise issue to judgment in their favor,
which is, there was no underpayment on the 2015 catalog sale.”
The court was not persuaded there were remaining issues on the
catalog sale claim, concluding, “I think that having ruled on the
breach of contract issue, solely with respect to the 2015 catalog
sale, that’s off the table for a trial and for the accounting.” The
court specified the accounting and declaratory relief causes of
action would proceed on Welty’s third party issues, not the Round
Hill sale.
The record supports the trial court’s determination the
catalog sale claim had been heard and determined in the contract
interpretation hearing. The trial court heard and determined
contractual interpretation on a single issue: breach of contract
“solely on the theory that [Welty] was underpaid on the Round
37
Hill deal.”15 Welty was not entitled to have this theory of
underpayment heard again under the guise of different causes of
action.16
Case law also supports the trial court’s determination the
issues decided against Welty in the MSA could not be determined
again in connection with Welty’s other causes of action. As to the
declaratory relief cause of action, it could not be used to renew
the issues already decided in the MSA. (Hood v. Superior Court
(1995) 33 Cal.App.4th 319, 324 [when “[t]he issues invoked in [a
declaratory relief] cause of action already were fully engaged by
other causes of action . . . , declaratory relief was unnecessary
and superfluous”].) Similarly, an accounting action is
superfluous when the issues raised may be “folded into” a breach
of contract cause of action. (Fleet v. Bank of America N.A. (2014)
229 Cal.App.4th 1403, 1414.) Finally, breach of the implied
covenant of good faith and fair dealing “will not be read into a
contract to prohibit a party from doing that which is expressly
permitted by the agreement itself.” (Wolf v. Walt Disney Pictures
& Television (2008) 162 Cal.App.4th 1107, 1120.) Because the
trial court determined as a matter of law that respondents did
not breach the SA by means of underpayment to Welty on the
15 As set forth above, the record reveals the trial court
permitted the parties to brief the contract interpretation issues
as they chose on the catalog sale issue. The issue was narrowed
by the parties, who filed simultaneous briefs on contract
interpretation.
16 As set forth below, the trial court later addressed Welty’s
theory the $35 million was unfairly allocated as between the
recordings and the publishing, known as the “M/P allocation”
issue.
38
catalog sale, Welty was not entitled to have the issue revived
under the caption of any other cause of action.17
IV. Denial of leave to amend
On October 4, 2022, approximately two weeks prior to the
scheduled trial date and over two years after he filed this
litigation, Welty sought to file a first amended complaint. The
matter was set for hearing on October 26, 2022, but instead was
heard on the first day of trial, October 17, 2022.
In the motion, Welty sought to add new theories of the case,
including new theories of contract interpretation concerning the
Test Period Fraction issue and the catalog sale.
On the first day of trial, the trial court announced its
tentative decision to deny the motion to amend the complaint,
explaining, “I’m particularly persuaded [because the] issue which
has percolated throughout the course of these proceedings was
resolved via the briefing and the court’s ruling back on
February 8, 2022. . . . I’m not inclined at this very late date to
reopen the pleadings to allow that theory once again to be visited
and evidence to be taken on it.” Welty’s counsel explained
Welty’s position the precise issues raised in the amendments
were not addressed in the previous briefing regarding contract
interpretation, to which the trial court responded, “if your
17 Kemp Bros. Construction, Inc. v. Titan Electric Corp. (2007)
146 Cal.App.4th 1474, cited for the first time in Welty’s reply
brief, is distinguishable. In Kemp, the trial court granted a
pretrial right to attachment order, finding probable validity of
the claim on the ground of prior litigation involving a Los Angeles
Unified School District hearing officer. (Id. at p. 1477.) Unlike
Kemp, the trial court here was referring to prior proceedings in
this case—not unrelated litigation.
39
predecessor counsel emphasized one part or two . . . in the
voluminous briefing that I had, you know, that’s a tactical
decision that your client has to live with. [¶] . . . [¶] . . . I did
not constrain either side as to the briefing at all.” Concerning the
allocation of assets under the catalog sale, the court stated, “both
sides had a full opportunity to brief that.”
A trial court has wide discretion in deciding whether to
permit amendment of a pleading. (Melican v. Regents of
University of California (2007) 151 Cal.App.4th 168, 175
(Melican).) Generally, we will not reverse such a determination
unless a manifest abuse of discretion is shown. (Ibid.)
Welty’s arguments focus on lack of prejudice to respondents
in permitting him to amend his complaint. Welty argues
respondents could not have been surprised when Welty sought
leave to allege the new theories, and he was not adding new
claims but seeking to conform to what the evidence in the case
demonstrated. He also asserts the timing did not prejudice
respondents because the bifurcated trial had not yet begun and
there was no jury waiting.
Respondents argue they were prejudiced by the potential
for an amended complaint with new theories after two years of
litigation. In addition, lack of prejudice is not the only thing a
court considers when deciding whether to grant or deny a motion
to amend a complaint. A court may also consider “‘“‘unwarranted
delay,’”’” which may alone constitute “‘“‘a valid reason for
denial’”’” of leave to amend. (P&D Consultants, Inc. v. City of
Carlsbad (2010) 190 Cal.App.4th 1332, 1345; see Magpali v.
Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 487-488.) The
trial court acted within its discretion in denying Welty leave to
amend his complaint on the eve of trial to add new theories two
40
years into the litigation, after a full hearing on the issue of the
catalog sale.
The cases Welty cites do not convince us the trial court
abused its discretion in this matter. In Tung v. Chicago Title Co.
(2021) 63 Cal.App.5th 734, 742, the plaintiff moved to amend his
complaint to plead attorney fees as damage. In light of the last
minute nature of the amendment, the trial court denied the
motion. (Id. at p. 743.) The Tung court reversed, finding
“significant evidence” that opposing counsel “was very aware of
Tung’s intent to pursue attorney fees as damages and sought
through discovery to clarify the amount of such attorney fees as
damages . . . .” (Id. at p. 752.) Because opposing counsel was
“fully aware” of “the theory of liability upon which Tung was
proceeding and the potential for an award of damages for
attorney fees” (id. at p. 756), the Tung court found an abuse of
discretion.
The circumstances before us are different. Not only was
Welty presenting new formulas for calculation of Welty’s share of
the catalog sale proceeds, there had been a full hearing on
contract interpretation where Welty was permitted to brief the
issue. Therefore Tung is not persuasive.
Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739 is also
distinguishable. The plaintiff moved to amend to add four causes
of action and simultaneously moved to continue trial. (Id. at
p. 743.) The opposition argued the plaintiff was “‘simply trying to
circumvent the trial court’s clear ruling’ on summary
adjudication that as a matter of law there had been no
misrepresentations by Elk that its roof shingles were defect free.”
(Id. at p. 760.) In determining the trial court abused its
discretion in denying these motions, the Atkinson court noted,
41
“Elk has not claimed that it will be prejudiced by this
amendment,” and concluded, “‘[i]t is an abuse of discretion to
deny leave to amend where the opposing party was not misled or
prejudiced by the amendment.’” (Id. at p. 761.) In this matter,
respondents claimed prejudice, and the trial court found the
amendment to be prejudicial given the complex prior proceedings
that had already occurred.
Finally, Welty distinguishes Duchrow v. Forrest (2013) 215
Cal.App.4th 1359, where a litigant moved to amend his complaint
more than two years after he filed it and on the fourth day of a
five-day trial. The Duchrow court explained the cases on
amending pleadings during trial emphasize two general
principles: “‘“(1) whether facts or legal theories are being changed
and (2) whether the opposing party will be prejudiced by the
proposed amendment.”’” (Id. at p. 1378.) The Duchrow court
concluded that both had occurred there.
The court here appropriately considered Welty’s delay in
presenting his new theories regarding the catalog sale issue,
particularly in light of the earlier briefing and hearing on the
matter. Under the circumstances, we decline to find an abuse of
discretion in the trial court’s determination the proposed
amendment, brought at such a late date, prejudiced respondents.
“‘“[A]s a matter of policy the ruling of the trial court in such
matters will be upheld unless a manifest or gross abuse of
discretion is shown.”’” (Melican, supra, 151 Cal.App.4th at
p. 175.) Given Welty’s delay in bringing the motion to amend,
and his earlier opportunities to make respondents aware of his
theories and oppose them, we cannot find the trial court abused
its discretion in disallowing Welty’s amendment such a short
time before trial.
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V. Asset allocation; M/P allocation; recoupment
Welty takes the position the trial court erred in summarily
disposing of his alternative theories of underpayment on the
Round Hill deal. Those theories were the “asset allocation” issue
and the “M/P allocation” issue. He also argues the court
summarily disposed of the “recoupment” issue. Welty has failed
to show the trial court dismissed these claims without
consideration and further has failed to show error.
A. Asset allocation issue
The asset allocation issue is Welty’s claim that respondents
unfairly allocated the $20 million catalog sales proceeds as
among the catalog assets without any contractual basis. This
issue is discussed above in part III, as it was part of Welty’s
argument the trial court dismissed his catalog sale claims “sua
sponte.”
In response to Welty’s argument the trial court should hear
and consider the asset allocation issue, Welty’s counsel argued
this issue was not briefed as part of the contract interpretation
hearing. The court stated, “I did not constrain either side as to
the briefing at all.” In sum, the trial court found that Welty had
forfeited the issue by failing to raise it in connection with the
contract interpretation hearing. Welty fails to provide any
support for his argument that the trial court failed to address
this issue.
Welty does not directly address the trial court’s ruling he
essentially forfeited this claim by failing to raise it during the
contract interpretation hearing on catalog sale underpayment.
Instead, he relies on his position the trial court dismissed such
claims. However, the record shows the trial court gave the
parties the opportunity to raise any contract issues in the
43
extensive, simultaneously filed briefing prior to the hearing on
contract interpretation. By failing to address the trial court’s
rationale for declining to hear the asset allocation issue after the
contract interpretation hearing, Welty has failed to convince this
court of error.
B. M/P allocation issue
The M/P allocation issue concerned Welty’s position that
respondents “had an implied duty to correctly allocate the total
$35,000,000 as between the masters and the publishing.” He also
contended there was a factual dispute as to “whether they had
fairly allocated an additional $1,000,000 that [respondents]
demanded from Round Hill, which was allocated 100% to
Holland.”
In the statement of decision for the phase 1 trial, the court
wrote: “At the (second) Final Status Conference on October 7,
2022, the Court clarified that Phase I of the trial would address:
(1) Welty’s theory that the Round Hill deal was actually for $35
million and that Welty was entitled to a portion of the $15 million
[respondent] Holland was paid for his publishing catalog and (2)
Welty’s theory that [respondents] failed to account to [Welty] for
his share of royalties from other third parties.” In the statement
of decision, the trial court addressed the M/P allocation issue,
concluding that Welty failed to meet his burden of proof on the
issue. The court noted Welty failed to provide evidence and
instead only provided speculation that the assets purchased by
Round Hill were designed to deprive him of his fair share. There
was competing evidence presented by respondents that the deal
was structured in accordance with industry standards. Further,
pursuant to the terms of the SA, “the band had the sole and
absolute discretion to exploit (or not exploit) the masters ‘in any
44
manner [the band] determine[ed].’” For these reasons, the trial
court rejected Welty’s M/P allocation claim.
The record does not support Welty’s position the claim was
not heard and decided by the trial court.
C. The recoupment issue
The recoupment issue is described as respondents’
retention of Welty’s earned royalties to pay down respondents’
substantial advances rather than paying him what he was owed.
The issue involved Sony. The record shows the trial court did not
dismiss this claim, as Welty suggests. Instead, the court heard
and considered evidence on the issue and ultimately ruled based
on its view of the evidence. The court commented Welty’s claim
was based primarily on the analysis and opinions of Ferguson.18
The trial court observed Ferguson was “a demonstrably biased
witness.” The court referenced an e-mail exchange of Ferguson’s
and noted “Ferguson’s demeanor and responses to questions also
demonstrated her lack of objectivity in this case.” After
reviewing the testimony, the court concluded, “Ferguson’s opinion
that Welty had been or should have been recouped by Sony is
rejected. No Sony witness was called to corroborate her.
Further, Ferguson was not properly designated as an expert. Her
opinion was based on her purported review of Sony records which
were never admitted in evidence.” The court further rejected
Welty’s position that because Sony failed to directly account to
Welty for his share of royalties, such obligation fell to the band.
18 As explained above, Ferguson was The Offspring’s business
manager until February 2010, and became Welty’s manager in
2003.
45
Nothing cited by Welty could support his position the band had
such an obligation.
Thus, contrary to Welty’s position, the court considered and
relied on evidence in reaching its conclusion on the recoupment
issue. Welty has not presented a substantial evidence challenge,
instead arguing the claim was improperly dismissed. No
improper dismissal occurred.
VI. Additional evidentiary rulings
Finally, Welty challenges additional evidentiary rulings.
Welty’s main argument concerns the court’s treatment of
Ferguson’s testimony, which was critical to his case. A trial
court’s evidentiary rulings during a bench trial are reviewed for
abuse of discretion. (Shaw v. County of Santa Cruz (2008) 170
Cal.App.4th 229, 281.) “This standard is not met by merely
arguing that a different ruling would have been better.” (Ibid.)
“In appeals challenging discretionary trial court rulings, it is the
appellant’s burden to establish an abuse of discretion.” (Ibid.)
Welty has failed to do so here. He references generally the
exclusion of Ferguson’s “opinions on the meaning of contractual
terms,” which the court found to be “irrelevant and inadmissible.”
However, Welty fails to provide legal support or discussion for his
position the trial court’s ruling was an abuse of discretion. Welty
next criticizes the court’s credibility determination that Ferguson
was biased and lacked credibility. The court noted, “after she
was terminated by the band she spent 10 or 12 years and a
hundred thousand dollars of [Welty’s] money coming up with her
theory of the case, and it sounds like she was on a mission.”
Welty argues, “if the court was going to weigh witness credibility,
it should have convened a jury to determine who was telling the
truth.” There is no indication in the record that Welty asked for
46
a jury at this stage of the litigation or that the trial court acted
improperly in assessing witness credibility during the bench trial.
Welty further asserts the court’s rulings excluding
testimony were inconsistent and arbitrarily applied to Welty. He
points out the court excluded, as improper expert testimony, most
of Ferguson’s testimony, which she prepared as Welty’s business
manager. The court also excluded testimony on Ferguson’s
tracking of royalties for Welty while she worked for respondents
from 2003-2010. Welty fails to discuss the grounds for exclusion
of such testimony or make legal argument as to why the
exclusion was improper. However, Welty argues that
respondents were permitted to provide undesignated expert
testimony over Welty’s objection, such as evidence of industry
standards. In support of his position the court’s rulings were
error, Welty cites Wolf v. Walt Disney Pictures & Television,
supra, 162 Cal.App.4th at page 1127, but fails to provide any
analysis of the case and how it applies in this matter.
Welty argues that although Leoni’s invoices were admitted,
it was error to exclude other evidence about the costs of
performing the accounting. Welty appears to argue he was
entitled to those costs as damages. Welty cites no legal support
for this argument. He does not provide reference to the legal
basis for the trial court’s ruling nor a direct refutation of that
legal basis. He has failed to show an abuse of discretion.
Welty makes the same unsupported argument with respect
to prejudgment interest on payments made to Welty. There is no
discussion of the trial court’s rationale nor is there reference to
any legal authority. Welty has failed to meet his burden of
showing an abuse of discretion occurred.
47
VII. Attorney fees and costs
Welty challenges the trial court’s postjudgment order
granting attorney fees and costs to respondents pursuant to a
prevailing party fee provision in the SA. Welty does not dispute
respondents were the prevailing parties or that they were
entitled to attorney fees and costs. The standard of review on
issues of attorney fees and costs is abuse of discretion. (Ellis v.
Toshiba America Information Systems, Inc. (2013) 218
Cal.App.4th 853, 882.) “‘“‘The trial court’s decision will only be
disturbed when there is no substantial evidence to support the
trial court’s findings or when there has been a miscarriage of
justice.’”’” (Ibid.)
First, Welty argues that respondents seeking and being
awarded fees for two percipient witnesses was unprecedented.
Welty does not name the witnesses nor discuss their role in the
litigation. Welty cites a portion of his opposition to respondents’
motion for attorney fees in which it is revealed that the subject
witnesses were attorneys, Paterno and Soriano. Welty’s citation
to his brief in the lower court, without further elaboration, does
not show an abuse of discretion.
Welty next challenges paralegal time for block-billed
administrative tasks such as uploading documents, claiming such
charges should have been reduced, and citing Missouri v. Jenkins
by Agyei (1989) 491 U.S. 274, 288. The case citation does not
support Welty’s position the trial court abused its discretion in
this matter, nor does Welty provide reasoned analysis of the
issue.
Welty argues that attorney time was improperly billed in
quarter-hour increments, citing Welch v. Metropolitan Life Ins.
Co. (9th Cir. 2007) 480 F.3d 942, 949. Welch does not support
48
Welty’s argument the trial court abused its discretion in this
case. The Welch court noted the district court “imposed a 20
percent across-the-board reduction on Welch’s requested hours
because [her attorneys] billed in quarter-hour increments.” (Id.
at p. 948.) The court conceded, “[t]he district court was in the
best position to determine in the first instance whether counsel’s
practice of billing by the quarter-hour resulted in a request for
compensation for hours not reasonably expended on the
litigation.” (Ibid.) Similarly here, the trial court was in the best
position to determine whether the quarter-hour billing system
resulted in bills that were higher than they should have been.
The California State Bar Committee’s “suggestion” to the
contrary does not lead us to find an abuse of discretion on the
record before us.19
The trial court also concluded Holland’s and Wasserman’s
“two 998 offers,” which Welty turned down, “were sufficiently
19 Welty cites two cases for the first time in his reply brief.
Neither convinces us the trial court abused its discretion here. In
re Marriage of Nassimi (2016) 3 Cal.App.5th 667, 694, involved a
denial of attorney fees that was affirmed on the ground the trial
court did not abuse its discretion in denying fees where the
moving party “failed to meet his burden of establishing the
amount of his reimbursable fees and costs” due to block billing.
Like the Nassimi court, we leave it to the trial court’s discretion
as to whether the moving party has adequately supported the
relevant fee request. In Collins v. City of Los Angeles (2012) 205
Cal.App.4th 140, 158, the Court of Appeal concluded there was no
reasonable basis for the trial court to deny compensation for
administrative work that is normally compensable. Here, the
trial court outlined the basis for the attorney fee award and was
apparently not impeded in its analysis by block billing.
49
certain and specific.” Welty disagrees, arguing respondents did
not show the offers were drafted with sufficient precision. He
then lists a series of questions he calls “unanswered and ignored
ambiguities” in the offers. Welty cites Burch v. Children’s
Hospital of Orange County Thrift Stores, Inc. (2003) 109
Cal.App.4th 537, 545, as support for his position that
respondents’ failure to make the offers jointly, and failure to
make other entities jointly and severally liable, rendered the
offers invalid. Again, Welty fails to provide legal analysis of the
case, or explain how it applies to the current matter. In Burch, a
Code of Civil Procedure section 998 offer made by a plaintiff was
deemed invalid because it was not expressly apportioned among
all four defendants in the case. (Burch, at p. 547.) That is not
the situation here, where two of the respondents made offers to
Welty, the sole plaintiff.
Welty complains both offers contained a provision requiring
that each party bear his or its own costs and attorney fees. Welty
provides no legal authority suggesting such a provision renders
the Code of Civil Procedure section 998 offer uncertain. He also
points out there was no settlement agreement or release attached
to the offers, creating further ambiguity. The authorities Welty
cites in support of his position this rendered the offers fatally
uncertain is not supported by the citations referenced.
In reviewing the trial court’s award of costs pursuant to
Code of Civil Procedure section 998, the applicable standard is
abuse of discretion. (Adams v. Ford Motor Co. (2011) 199
Cal.App.4th 1475, 1482.) Unless clear abuse is shown, this court
will not substitute its opinion for that of the trial court. (Ibid.)
Welty has failed to show that the trial court could not have
reasonably concluded that Holland’s and Wasserman’s Code of
50
Civil Procedure section 998 offers were sufficient. Having
presided over the proceedings, the trial court was in the best
position to evaluate the offers. Welty has failed to show that the
trial court abused its discretion.
DISPOSITION
The judgment and order are affirmed. Respondents are
awarded their costs of appeal.
________________________
CHAVEZ, J.
We concur:
________________________
LUI, P. J.
________________________
ASHMANN-GERST, J.
51