Judge Bruce G. Iwasaki, Case Number: 22STCV34567, Date: 2023-06-22 Tentative Ruling

Responding Party: Plaintiffs Capucine Jackson and Klock Work Entertainment, Inc.

Tentative Ruling: The Demurrer to the first and second causes of action is sustained without leave to amend in part and overruled in part, and the demurrer to third cause of action is sustained without leave to amend. The Motion to Strike is denied.

This action arises over a dispute over entitlement to the distribution of certain music royalties.

Plaintiff Capucine Jackson (Jackson) is the widow and successor-in-interest to music producer Johnny Jackson a/k/a Johnny J (Johnny J) who passed away in 2008. Johnny J produced numerous music recordings for the late recording artist, Tupac Shakur, the rights of which are now mostly controlled by Shakur’s successor in interest, Defendant Amaru Entertainment Inc. (Defendant Amaru). The SAC alleges that the over 100 recordings that Johnny J produced for Shakur, referred to as the “Masters,” are governed by several Agreements. The Agreements allegedly provide in substance, that every time Shakur is paid with respect to the exploitation of a Master, Johnny J would also get paid. The pleadings allege Defendant Amaru breached the Agreements by refusing to cause SoundExchange to pay Plaintiffs royalties owed by refusing to issue a statutorily required letter of direction (LOD).

On October 28, 2022, Plaintiff Jackson filed a Complaint against Defendant Amaru for (1.) breach of contract, (2.) specific performance, (3.) declaratory relief, and (4.) injunctive relief. On January 10, 2023, Defendant Amaru filed a demurrer to Plaintiffs’ Complaint, which was sustained, with leave to amend.

On March 20, 2023, Plaintiff Jackson filed her First Amended Complaint, which asserted causes of action for: (1.) breach of contract, (2.) specific performance, (3.) declaratory relief, (4.) injunctive relief, and (5.) fraud (concealment).

On May 22, 2023, Defendant Amaru filed a demurrer to Plaintiff Jackson's First Amended Complaint, which was sustained by this Court on June 22, 2023, with leave to amend, as to the causes of action for breach of contract, declaratory relief, and fraud (concealment), but without leave to amend, as to her causes of action for specific performance and injunctive relief.

On July 12, 2023, Plaintiffs Capucine Jackson and (newly included) Klock Work Entertainment, Inc. (Plaintiffs) filed a Second Amended Complaint alleging causes of action for (1.) breach of contract, (2.) declaratory relief, and (3.) fraud.

On August 11, 2023, Defendant Amaru filed a demurrer and motion to strike to Plaintiffs’ SAC. Plaintiffs filed an opposition to both the demurrer and motion to strike.

The demurrer as to the first and second causes of action is sustained in part without leave to amend and overruled in part, and the demurrer is sustained without leave as to the third cause of action. The motion to strike is denied.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc. § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc. § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

Defendant Amaru demurs to the first cause of action for breach of contract on the grounds that Plaintiffs’ claim is barred by the statute of limitations.

To state a claim for breach of contract, a plaintiff must allege “(1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)

According to the SAC, Defendant Amaru breached the May 12, 1998 Settlement Agreement, the May 21, 1999 Producer Agreement, the September 29, 1999 Producer Agreement and the May 21, 2001 Global Agreement (collectively, the Agreements (SAC, Exhibits B-E)) when Defendant Amaru failed to provide statements for, and facilitate the provision of a share of the digital performance royalties from SoundExchange to Plaintiffs. (SAC ¶ 61.)

For a breach of a written contract, the statute of limitations is four years. (Code Civ. Proc., § 337, subd. (a); Landale-Cameron Court, Inc. v. Ahonen (2007) 155 Cal.App.4th 1401, 1410.) Generally, the statute of limitations on a cause of action for breach of contract, whether written or oral, begins to run at the time of the breach. (See Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806; E.O.C. Ord, Inc. v. Kovakovich (1988) 200 Cal.App.3d 1194, 1203.)

Here, the SAC alleges that Defendant Amaru began “receiving SoundExchange statements and royalties with respect to the Released Masters since approximately 2003. Amaru had the obligation to disclose this information to Plaintiffs, but instead concealed it from Plaintiffs, with the intention to convert monies to which Plaintiffs were entitled.” (SAC ¶ 11.) Plaintiffs now claim they are entitled to “damages in the amount of all SoundExchange royalties received by Defendant since 2003.” (SAC ¶ 63.) Thus, under Plaintiffs’ breach of contract theory, the breach occurred (and the claim began to accrue) in 2003. Plaintiffs did not file this action until October 28, 2022. On its face, the breach of contract claim is barred by the four-year statute of limitations.

However, in the SAC, Plaintiffs also assert that the statutes of limitations is subject to equitable tolling, equitable estoppel, delayed discovery and the continuous accrual doctrine.

As a preliminary matter, Plaintiffs have not alleged facts to support the application of equitable tolling.

The SAC alleges Plaintiffs’ breach of contract claim should be equitably tolled by Defendant Amaru’s failure to respond to Plaintiffs’ requests for a letter of direction from June 4, 2020 until January 8, 2022 – when Defendant Amaru informed Plaintiffs that it would not issue the LOD to SoundExchange. (SAC ¶¶ 54-56).

“Equitable tolling is a ‘judicially created, nonstatutory doctrine’ that ‘ “suspend[s] or extend[s] a statute of limitations as necessary to ensure fundamental practicality and fairness.” (Ventura Coastal, LLC v. Occupational Safety and Health Appeals Board (2020) 58 Cal.App.5th 1, 31.) Equitable tolling “applies only ‘in carefully considered situations to prevent the unjust technical forfeiture of causes of action.’” (Law Finance Group, LLC v. Key (2023) 14 Cal.5th 932, 954.) “However, courts have adhered to a general policy which favors relieving plaintiff from the bar of a limitations statute when, possessing several legal remedies he [or she], reasonably and in good faith, pursues one designed to lessen the extent of his [or her] injuries or damage.” (Addison v. State of California (1978) 21 Cal.3d 313, 317–318 [italics added].) That is, ‘[t]he doctrine of equitable tolling, however, only applies where the plaintiff has alternate remedies and has acted in good faith.” (Thomas v. Gilliland (2002) 95 Cal.App.4th 427, 434.)

In this case, Plaintiffs cites no authority suggesting that their informal discussions with Defendant Amaru satisfies the “alternative remedy” requirement for equitable tolling. Instead, case law suggests that an alternative remedy for equitable tolling purposes must be consist of an administrative or judicial proceedings created by statute or tort law. (See e.g., Downs v. Department of Water & Power (1997) 58 Cal.App.4th 1093, 1100-1101 [noting other circumstances where equitable tolling had been applied].)

Moreover, in their opposition to the demurrer, Plaintiffs make no legal argument with respect to equitable tolling, and instead suggest that Defendant Amaru is equitably estopped from invoking the statute of limitations.[1] Thus, the Court finds Plaintiffs have not alleged facts to support the application of equitable tolling here.

For its contention that Defendant Amaru is equitably estopped from asserting the statute of limitations, Plaintiffs argue that, “Defendant’s concealment of the SoundExchange statements from 2003 onwards equitably estops Defendant from invoking the statute of limitations.” (Opp. 13:16-17.)

In appropriate cases, a defendant may be equitably estopped from asserting a statutory limitations period. (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 383–384.) “ ‘ “Generally speaking, four elements must be present in order to apply the doctrine of equitable estoppel: (1) the party to be estopped must be apprised of the facts; (2) he [or she] must intend that his [or her] conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he [or she] must rely upon the conduct to his [or her] injury.” ’ ” (Honeywell v. Workers’ Comp. Appeals Bd. (2005) 35 Cal.4th 24, 37.)

“Equitable estoppel does not “extend” the statute of limitations “ ‘but rather comes into play only after the limitations period has run and addresses itself to the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period.’ ” (Cordova v. 21st Century Ins. Co. (2005) 129 Cal.App.4th 89, 96.) “[C]ase law supports a general proposition that a party may be equitably estopped from asserting a statute of limitations defense, such estoppel requires, among other things, a plaintiff's ignorance of the true state of facts as well as reliance upon the inequitable conduct.” (Sharon v. Porter (2019) 41 Cal.App.5th 1, 11.)

In opposition, Plaintiffs rely on the holding in Parsons v. Tickner (1995) 31 Cal.App.4th 1513. However, Parsons neither held nor discussed equitable estoppel – with respect to the statute of limitations or otherwise. Rather, it held that a demurrer to the fraud claims was improperly sustained under Code of Civil Procedure section 338, subdivision (d), because the complaint had adequately alleged facts establishing that the claims were undiscoverable for a lengthy period. (Id. at 1524–1530.) In fact, Plaintiffs cite no case that turned on the application of equitable estoppel to the statute of limitations.

Here, Plaintiffs’ equitable estoppel argument conflates the underlying wrongful conduct with the conduct necessary to support equitable estoppel. (Opp. 12:20-13:22.) Additionally, in the context of an entirely different legal argument, Plaintiffs contend that they “reasonably relied on Defendant’s representations that the issue would be resolved without the need for litigation.” (Opp. 14:18-19 [citing SAC ¶ 54].) But actually, the SAC merely alleges that Defendant represented that it was “looking into it.” (SAC ¶ 54.) Even if the SAC alleged that Defendants had represented litigation would be unnecessary, such a vague, speculative promise of future events does not support Plaintiff’s reasonable reliance of years of forgoing bringing an action. Therefore, Plaintiffs do not allege sufficient facts to support the application of equitable estoppel.

The SAC alleges that Plaintiffs’ claims were tolled due to their purported delayed discovery in 2019. Specifically, Plaintiffs allege that in 2019, a representative of the Film Musician Secondary Markets Funds (FMSM Fund) alerted her to possible unpaid Sound Exchange royalties. (SAC ¶¶ 49-50.)

Notwithstanding these allegations, Defendant Amaru argues that all allegations taken together in the SAC demonstrates that Plaintiffs cannot rely on delayed discovery to recover damages dating back to 2003.

The delayed discovery rule “delays accrual [of a cause of action] until the plaintiff has, or should have, inquiry notice of the cause of action.... [P]laintiffs are charged with presumptive knowledge of an injury if they have ‘ “ ‘information of circumstances to put [them] on inquiry ’ “ ‘ or if they have ‘ “ ‘the opportunity to obtain knowledge from sources open to [their] investigation.’ “ ‘ [Citations.] In other words, plaintiffs are required to conduct a reasonable investigation after becoming aware of an injury, and are charged with knowledge of the information that would have been revealed by such an investigation.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807-808, fn. omitted.) The delayed discovery rule may postpone the accrual of a breach of contract claim under some circumstances, such as when the breach involves fraud. (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 830.)

Here, Defendant Amaru argues that Plaintiffs have not adequately alleged facts to support delayed discovery. Specifically, Defendant Amaru argues that Plaintiffs allegation demonstrates that Plaintiffs were on inquiry notice prior to 2018.

The SAC generally states that from 1998 to 2008, Plaintiffs “discovered various, isolated instances of breach, infringement and/or underpayment with respect to the royalties due to Johnny J.” (SAC ¶ 44 [p. 14].) Plaintiffs acted diligently when they had “actual knowledge” of a specific “problem.” (Id.) Even more specifically, Plaintiffs allege that, in 2007, Plaintiff discovered that a remixed version of a Master was used in the motion picture, "Blood Diamond,” and that, after searching the applicable royalty statements, Plaintiffs did not locate any mention of compensation paid to Jackson for the song used in the film. (SAC ¶ 45 [p. 15]; see FAC ¶ 28.) The FAC alleged that he later found that no letter of direction had been issued by Amaru or Interscope. (FAC ¶ 28.)[2]

The SAC also alleges that, in around 2010, Plaintiffs reached out to well-known performing rights organizations she knew about (ASCAP and BMI) to confirm that she was listed as beneficiary of Johnny J's royalties. (SAC ¶ 34 [pp. 15-16].)

In 2011, Plaintiff inquired with her attorney, Ms. Berliner at KHP, whether an audit of the royalty statements would be beneficial. (SAC ¶ 46.) Her attorney discouraged the audit stating that “does not look likely that the recovery would exceed the cost required to send an audit team.” (SAC ¶ 46.) Plaintiff inquired again in 2013 and was again discouraged. (SAC ¶ 47.)

As argued in the demurrer, these allegations demonstrate Plaintiff was aware of multiple instances where Plaintiff was potentially not receiving the full extent of the royalties that they were entitled to under the Agreements. Further, based on prior pleadings, the allegations also support instances where Defendant Amaru’s actions caused Plaintiffs not to receive all the royalties Plaintiffs believed they were entitled to under the parties’ Agreements. The allegations show that Plaintiffs were suspicious of other acts of wrongdoing and were conducting some form of investigation as early as 2007 to uncover possible nonpayment. Based on these allegations, the SAC indicates that Plaintiffs were on inquiry notice much earlier than 2018 of the possible facts supporting of their breach of contract claims.

In opposition, Plaintiffs argue that Plaintiffs’ allegations regarding notice of prior issues do not put Plaintiff on suspicion of wrongdoing here; that is, the SAC’s allegations of prior acts of non-payment are factually different and do not support a finding that they were on inquiry notice. Specifically, the SAC alleges that these were “isolated” incidents of breaches, infringements and/or underpayments with respect to the royalties that were quickly resolved by the parties. (SAC ¶ 44.) Plaintiffs also argue that they had “no reason to even believe [the nonpayment of royalties] was caused by Amaru.” (Opp. 11:19-21.) Lastly, they contend that the Court conflated its analysis of the issue of when Plaintiff’s “investigation” began with the issue of Jackson’s “suspicion” of Amaru’s breach of contract.

The allegations in the SAC do not support delaying accrual of causes of action that arose more than four years before the Complaint was filed.

It is well settled that “[a] plaintiff need not be aware of the specific ‘facts’ necessary to establish the claim; that is a process contemplated by pretrial discovery. Once the plaintiff has a suspicion of wrongdoing, and therefore an incentive to sue, she must decide whether to file suit or sit on her rights. So long as a suspicion exists, it is clear that the plaintiff must go find the facts; she cannot wait for the facts to find her.” (Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at 1111.)

Here, Plaintiffs cannot rely on when they discovered a particular breach for nonpayment of royalties from Sound Exchange when the SAC is replete with other similar instances of nonpayment. It is not necessary that Plaintiffs were not specifically aware of non-payment from a specific source – only that they were suspicious that they were not receiving their required payments for the Masters.

Nor – under this suspicion of wrongdoing notice – can Plaintiffs rely on the argument that they did not know who was responsible for the prior non-payments. As the doctrine holds, the burden is on Plaintiff to “go finds the facts.” Moreover, the FAC previously alleged that the 2007 nonpayment was caused by the fact that “neither Amaru nor Interscope Records had issued a letter of direction for the benefit of Johnny J as was required by the Agreement.” (FAC ¶ 28.) This is the exact same allegation of misconduct that forms the basis of all of Plaintiffs' claims in the SAC (Defendant Amaro has failed and refused to issue a letter of direction to SoundExchange for Plaintiffs' benefit). The FAC also alleged an “ongoing investigation into missing funds.” (FAC ¶ 39.)

Based on the foregoing, the delayed discovery rule does not postpone accrual of all claims dating back to 2003.

Claims that arose within four years of the complaint’s filing are, however, not subject to the statute of limitations defense. the right to royalties under the Agreements is akin to an installment contract, with each royalty payment in the nature of an installment contract payment and each payment a severable and separate potential breach of contract. (Gilkyson v. Disney Enterprises, Inc. (2016) 244 Cal.App. 4th 1336, 1343; Tsemetzin v. Coast Federal Savings & Loan Assn. (1997) 57 Cal.App.4th 1334, 1344; see Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co. (2004) 116 Cal.App.4th 1375, 1387-1396.) As such, where there is no fixed amount to be paid, but rather a continuing obligation to pay, or to cause periodic payment of a portion of profits as royalties, each breach when payment is due starts the clock anew for statute of limitations purposes.

In response, Defendant Amaru argues that the alleged breach is for failure to send the LOD (or provide an LOD), which is a one-time occurrence, not a continuing obligation such as paying royalties. However, this ignores the SAC allegations that the Agreements entitle Plaintiffs to a certain royalty rate.

Thus, this statute of limitations demurrer is sustained without leave, but only as to breaches of the contract that occurred more than four years prior to the filing of the complaint. (See MCA Records, Inc. v. Allison (Cal. Ct. App., June 5, 2009, No. B199801) 2009 WL 1565037, at *14-15.) With respect to breaches that occurred less than four years before the complaint was filed, the demurrer is overruled.

This statute of limitations analysis also applies to the derivative portion of the declaratory relief cause of action.

The SAC alleges that—based on Plaintiff’s 2001 Global Agreement or a combination of the Agreements – Plaintiffs are entitled to SoundExchange royalties going back to 2003 and into the future, or in the alternative, from 2018 in perpetuity. (SAC ¶ 69.)

The four-year limitations period equally applies to claims for declaratory relief arising from a written contract. (Bank of New York Mellon v. Citibank, N.A. (2017) 8 Cal.App.5th 935, 943 [“A claim for declaratory relief is subject to the same statute of limitations as the legal or equitable claim on which it is based.”].) Thus, the statute of limitations applied to the breach of contract claim bars relief to the same extent.

The demurrer is sustained as to causes of action for breaches of the Agreements that arose prior to four years before the filing of the Complaint, and is otherwise overruled.

Plaintiff also advances a new theory in its declaratory relief cause of action. The SAC alleges that Plaintiff is a joint copyright owner over some of the Masters. (SAC ¶ 69.) The parties debate whether or not there is an actual controversy on this point. But to the extent Plaintiff’s declaratory relief claim requires this Court to determine whether it has a copyright interest, the demurrer is sustained without leave to amend. This Court lacks jurisdiction to adjudicate the copyright claim. (28 U.S.C. § 1338, subd. (a).)

Defendant Amaru argues the fraudulent concealment claim is barred by the three-year statute of limitations.[3]

To state a claim for fraudulent inducement-concealment, Plaintiffs must allege: (1) the defendant “concealed or suppressed a material fact,” (2) the defendant was “under a duty to disclose the fact to the plaintiff,” (3) the defendant “intentionally concealed or suppressed the fact with the intent to defraud the plaintiff,” (4) the plaintiff was “unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact,” and (5) “as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (BiglerEngler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 310-311.)

The SAC alleges fraudulent concealment based on Defendant Amaru’s intentional failure to disclose SoundExchange royalty statements and information. (SAC ¶ 75.) Based on the allegations, Defendants alleged fraudulent omission began in 2003. (SAC ¶ 11 [“Upon information and belief, Amaru has been receiving SoundExchange statements and royalties with respect to the Released Masters since approximately 2003.”].)

The statute of limitations for fraud is three years. (Civ. Proc. Code, § 338, subd. (d).)

Here, Plaintiffs were on notice of the possibility of unpaid SoundExchange royalties on or about August 29, 2019. (SAC ¶¶ 48-50.) Despite this notice Plaintiffs waited until over three years later, until October 28, 2022, to file the initial complaint.

In opposition, Plaintiffs’ argue that “Plaintiffs were not actually damaged, given the Parties’ prior conduct of informally resolving disputes, until Amaru definitively repudiated its implied and express obligations under the law and the Agreements to disclose all statements under which Plaintiffs were entitled to receive royalties and cause Plaintiffs to be paid.” (Opp. 14:8-11.)

Plaintiffs’ argument that the claim did not accrue until 2022 is nonsensical and contrary to the allegations where the fraud claim is based on the failure to disclose the SoundExchange statements starting in 2003 such that Plaintiff did not receive their share of the SoundExchange royalties since 2003. Further, for the reasons discussed regarding the breach of contract claim, Plaintiffs cannot rely on equitable tolling or equitable estoppel to delay accrual of this claim. Thus, the demurrer to this cause of action is sustained without leave to amend.

Defendant argues that the FAC previously alleged “On or about July 11, 2019, through the course of her investigation of possibly missing funds, Ms. Jackson located documents referring to AFM & SAG-AFTRA ... .” (FAC ¶ 39). However, in the SAC, Plaintiffs omitted any mention of, or reference to this “investigation.”

Similarly, in the FAC, Plaintiffs alleged a specific instance where Plaintiffs’ nonpayment of royalties was the fault of Defendant Amaru. (FAC ¶ 28 [“Johnny J and Ms. Jackson later discovered that neither Amaru nor Interscope Records had issued a letter of direction for the benefit of Johnny J as was required by the Agreement.”] However, the SAC omit (without explanation) this allegation and now alleges that while there were “isolated instances of nonpayment to Jackson, her and her attorneys’ immediate and diligent resolution thereof” “most of the time, either Amaru was not to blame, or Jackson never found out who was at fault for the nonpayment.” (Opp., p. 3:20-23 [SAC ¶ 45 [p. 15] [“Johnny J and Ms. Jackson never discovered who might have been at fault for their lack of receipt of fees for ‘Blood Diamond’”].) These new allegations are inconsistent with Plaintiff Jackson’s allegations in the FAC.

Generally, when ruling on a demurrer, courts must assume the truth of the complaint's factual allegations. (Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 383.) The sham pleading doctrine operates as an exception to this general rule and applies “where a party files an amended complaint and seeks to avoid the defects of a prior complaint either by omitting the facts that rendered the complaint defective or by pleading facts inconsistent with the allegations of prior pleadings. [Citations.]” (Id. at p. 384.)

Under these circumstances, the court is permitted “to take judicial notice of the prior pleadings and requires that the pleader explain the inconsistency. If he fails to do so the court may disregard the inconsistent allegations and read into the amended complaint the allegations of the superseded complaint. [Citations.]” (Ibid.) “[A] proposed amendment which contradicts allegations in an earlier pleading will not be allowed in the absence of ‘very satisfactory evidence’ upon which it is ‘clearly shown that the earlier pleading is the result of mistake or inadvertence.’ [Citations.]” (American Advertising & Sales Co. v. Mid–Western Transport (1984) 152 Cal.App.3d 875, 879.)

As addressed in the delayed discovery discussions above, these omitted allegations are persuasive to the Court’s finding that Plaintiffs cannot rely on delayed discovery. Rather than explain these problematic allegations, Plaintiffs chose simply to omit them and/or contradict them – raising sham pleading issues.

Thus, the Court may still consider these allegations for the purpose of determining the adequacy of the allegations in the operative pleading. (See Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1043 fn. 25 [“Under the sham-pleading doctrine, admissions in an original complaint that has been superseded by an amended pleading remain within the court's cognizance and the alteration of such statements by amendment designed to conceal fundamental vulnerabilities in a plaintiff's case will not be accepted.”].)

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.”¿(Code Civ. Proc. § 436.) “Immaterial” or “irrelevant” matters include allegations not essential to the claim, allegations neither pertinent to nor supported by an otherwise sufficient claim or a demand for judgment requesting relief not supported by the allegations of the complaint. (Code Civ. Proc. § 431.10, subds. (b)(1)-(3).)

Defendant Amaru moves to strike Plaintiffs’ allegations seeking specific performance. Defendant notes that the court previously sustained the demurrer without leave to the specific performance cause of action on the grounds that a “party may not obtain both specific performance and damages for the same breach of contract, either in single or multiple actions." (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal. 4th 888, 905.) The request for specific performance is now sought as a remedy to the breach of contract claim. (SAC ¶ 65, Prayer, ¶ 2.)

In Mycogen Corp. v. Monsanto Co. (2002) 28 Cal. 4th 888, the court held “a party may not obtain both specific performance and damages for the same breach of contract, either in single or multiple actions. “A plaintiff ... may not be awarded both [specific performance and damages for breach of contract] to the extent such an award would constitute a double recovery.” (Id. at 905.)

However, as a preliminary matter, the ruling in Mycogen Corp. v. Monsanto Co. (2002) 28 Cal. 4th 888 occurred after the completion of two separate trial on the merits to a breach of contract claim; the analysis turned on the application of res judicata.

In contrast here, Plaintiffs are at the pleading stage. A party may allege alternative theories of relief on the pleading stage. (See Steiner v. Rowley (1950) 35 Cal.2d 713, 720 [explaining that the pleading of inconsistent, mutually exclusive remedies and alternative causes of action on the same set of facts is permissible]; Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 234 fn.7 [“A plaintiff ordinarily may pursue inconsistent remedies in her complaint and need not make an election of remedies at the pleading stage.”].)

Additionally, Plaintiffs contend that the specific performance relief is not mutually exclusive as the request for damages do not afford Plaintiffs complete relief because it does not ensure receipt of future payments. Here, the specific performance allegation requests an order compelling Defendant Amaru to provide a LOD to ensure future payments by SoundExchnage – a threat of continued harm -- and not simply to redress past damages. (See, e.g., Tamarind Lithography Workship, Inc., v. Sanders (1983) 143 Cal.App.3d 571, 575-576.)

The demurrer is sustained without leave to amend as to the first and second causes of action with respect to nonpayment of royalties more than four years before the complaint was filed, and overruled with respect to royalties allegedly due four years or less before the complaint was filed. The demurrer is sustained without leave to amend to the extent Plaintiff seeks a determination of its interest in a copyright. The demurrer to the third cause of action is sustained without leave to amend. The motion to strike is denied.

[1] “The doctrines of equitable tolling and equitable estoppel are distinct, . . . each arising under different circumstances, and having different rationales and different predicates.” (Cordova v. 21st Century Ins. Co. (2005) 129 Cal.App.4th 89, 96.)

[2] The Court’s reliance on the allegations in the FAC is supported by its sham pleading analysis below.

[3] Contrary to the argument in the opposition, the Court made no determination that this claim survived the statute of limitations analysis on its previous demurrer ruling. (Opp. 13:24-14:4.)

Judge Bruce G. Iwasaki

Department 58