Judge: Daniel S. Murphy, Case: 23STCV15891, Date: 2024-08-16 Tentative Ruling

Case Number: 23STCV15891    Hearing Date: August 16, 2024    Dept: 32

BACKGROUND

            On July 7, 2023, Plaintiff Omeira Studio Partners, Ltd. (Omeira) filed this action against Defendant Fibonacci Films, LLC (Fibonacci) for (1) declaratory relief, (2) breach of contract, and (3) breach of the implied covenant of good faith and fair dealing. The complaint concerns the rights to $589,290 of proceeds from the film First Reformed (the Picture), which Fibonacci has allegedly refused to distribute to Omeira pursuant to a settlement agreement (the Agreement). The funds are currently held by third-party collection agent Freeway CAM B.V. (Freeway).

            On August 25, 2023, Fibonacci filed a cross-complaint against Omeira asserting the same three causes of action. The cross-complaint alleges that Fibonacci is contractually entitled to the $589,290 in first position against Omeira.

            On April 19, 2024, Fibonacci filed the instant motion for summary adjudication of the declaratory relief claim in its cross-complaint and the affirmative defenses in Omeira’s answer to the cross-complaint. Omeira filed its opposition on August 2, 2024. Fibonacci filed its reply on August 12, 2024.

LEGAL STANDARD

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure section 437c, subdivision (c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.)

As to each claim as framed by the complaint, the plaintiff moving for summary judgment must satisfy the initial burden of proof by presenting facts to establish each element of the cause of action. (Code Civ. Proc., § 437c, subd. (p)(1).) Once the plaintiff has met that burden, the burden shifts to the defendant to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. (Code Civ. Proc., § 437c, subd. (p)(1).) To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

EVIDENTIARY OBJECTIONS

Omeira’s Objections

• Objection Nos. 1-4 are sustained.

Fibonacci’s Objections

• The Court does not consider Fibonacci’s objections, as they are directed at Omeira’s separate statement rather than actual items of evidence. Omeira’s legal arguments and summary of facts are not properly subject to evidentiary objections. As each statement of fact is supported by multiple items of evidence, the objections fail to identify the exact document and location of the specific material being objected to. (See Cal. Rules of Ct., Rule 3.1354(b).)

DISCUSSION

I. Declaratory Relief

            a. Section 2.2.5 of the Agreement

            The parties entered into a Collection Account Management Pre-Agreement (pre-CAMA), which included a “Schedule 2” for the distribution of Collected Gross Receipts. (Fibonacci’s Stmt. of Undisputed Facts (UF) 15, 45.) Fibonacci relies on Section 2.2.5 of the Agreement, which replaced certain language in Schedule 2 with the following language:

“Solely from the Domestic Territory Gross Receipt, to Omeira, until recoupment of the Omeira Contribution (to the extent not already recouped from ROW Territory Collected Gross Receipts), but in the event that Omeira is paid any amounts from the Fibonacci cash deposit pursuant to the Pledge and Assignment Agreement among those parties and concerning the Film, to Fibonacci in first position until recoupment by Fibonacci of the amount of the Fibonacci cash deposit so paid to Omeira and then to Omeira until recoupment of the Omeira Contribution and thereafter.”

(UF 46.)

            Fibonacci contends that Omeira was paid $910,740 from the Fibonacci cash deposit funds (UF 44), and therefore, Fibonacci is entitled to recoup that amount from the Domestic Territory Gross Receipts in first position. Because the remaining amount of the Domestic Receipts is only $510,290, Fibonacci argues that it is entitled to the entire amount.

            Omeira argues that the “cash deposit” referenced in Section 2.2.5 was not made pursuant to the Pledge and Assignment Agreement but rather under the Stipulation to Distribute Interpleaded Funds, incorporated into the Agreement as Schedule A. Omeira points out that under Fibonacci’s own undisputed facts, “Schedule A is the Stipulation filed with the Court whereunder the amount of $910,740 was paid to Omeira.” (See UF 51.) Thus, Omeira argues that Fibonacci’s right to first position under Section 2.2.5 was never triggered. 

            b. Schedule B

            Incorporated into the Agreement is Schedule B, which is a “Direction to Pay” instructing Freeway on how to distribute the funds. (Omeira’s Stmt. of Add’l Facts (AF) 7.) Schedule B states that “[Omeira] will assign to Fibonacci its entitlements under Paragraph 5 of Schedule 2 of the Pre-CAMA once [Omeira] has been paid a sum of $589,260 thereunder.” (Ibid.) Omeira contends that Fibonacci acknowledged its understanding of this when its attorney distributed a Commercial Summary detailing how Fibonacci interpreted the Agreement. The Commercial Summary stated: “From the escrow funds currently held by the court, Omeira will be paid $910,710. From the funds currently held by Freeway representing Domestic Territory Collected Gross Receipts, Omeira will be paid $589,290.” (AF 13.)    

            Fibonacci argues that Schedule B is moot because Section 2.2.7 of the Agreement provides that the Direction to Pay was only to be executed “[i]n the event the parties are unable to secure the signature of the other parties to the pre-CAMA.” (UF 54.) Fibonacci argues that because the pre-CAMA was fully signed, the condition precedent to Schedule B never materialized, rendering Schedule B invalid. In response, Omeira argues that Schedule B was executed as part of the Agreement and reflects the parties’ intent. (Resp. to UF 54.)

c. Analysis

                        1. Section 2.2.5

The Court finds that there is a triable issue over Fibonacci’s entitlement to the “first position” under Section 2.2.5 of the Agreement. Specifically, under Section 2.2.5, the first position is triggered “in the event that Omeira is paid any amounts from the Fibonacci cash deposit pursuant to the Pledge and Assignment Agreement.” (UF 46.) However, Omeira was paid $910,740 under the Schedule A Stipulation to Distribute Interpleaded Funds, not the Pledge and Assignment Agreement. (UF 51.) Fibonacci confirms in reply that “no funds were ever paid from the Pledge and Assignment Agreement to Omeira.” (Reply 5:24-25.) Thus, a reasonable trier of fact may find that Fibonacci’s first position was not triggered under Section 2.2.5.    

            2. Schedule B

The Court finds that Schedule B raises a factual dispute over the intended distribution. Schedule B provides that Omeira be paid $589,260 before the payment rights are assigned to Fibonacci. (AF 7.) Fibonacci has not established as a matter of law that Section 2.2.7 of the Agreement renders Schedule B void. Section 2.2.7 provides, in its entirety:

“The parties agree to reasonably cooperate to obtain all signatures on an amended pre-CAMA incorporating the revision set forth in Section 2.3.1. In the event the parties are unable to secure the signatures of the other parties to the pre-CAMA (or the long form CAMA if required pursuant to paragraph 2.b), Ferrocyanide shall execute a Direction To Pay in the form set forth in Schedule B, instructing Freeway to make payments as described in paragraph 2.3.1.”

(FSMA 069.) Section 2.3.1 in turn provides:

“Ferrocyanide will seek A24’s written consent to assign to Fibonacci Ferrocyanide’s contractual right to receive reporting from A24, to audit A24, and inspection rights (and related enforcement rights) of A24 set forth in paragraph 16 of the Distribution Agreement entered into by and between A24 and Ferrocyanide dated as of November 28, 2017.”

(FSMA 070.)

            Section 2.2.7 provides that “Ferrocyanide shall execute a Direction to Pay in the form set forth in Schedule B, instructing Freeway to make payments as described in paragraph 2.3.1.” However, Section 2.3.1 contains no payment instructions, and Schedule B does not even contain a signature line for Ferrocyanide. At best, this results in ambiguity. Fibonacci itself alleges that Section 2.2.7 is “unintelligible” and “moot ab initio.” (See Cross-Compl. ¶ 16.) Thus, it cannot be determined as a matter of law that Section 2.2.7 voids the existing Direction to Pay signed by Omeira and Fibonacci. (See FSMA 087-092.)

The Court agrees with Omeira that the execution and incorporation of the Direction to Pay suggest that the Direction is a valid part of the Agreement. (See Civ. Code, § 1642 [“Several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together”].) A reasonable trier of fact may find that Schedule B is valid and governs the distribution of the Gross Receipts held by Freeway.

Lastly, even assuming Schedule B is void, that would only mean Omeira cannot rely on Schedule B to claim entitlement to the Freeway funds. However, that does not establish as a matter of law that Fibonacci is entitled to the funds. As framed in its moving papers, Fibonacci claims entitlement to the Freeway funds under the “first position” provision of Section 2.2.5 of the Agreement. As discussed above, there is a factual dispute over whether the first position was triggered. Thus, there is a factual dispute over Fibonacci’s entitlement to the Freeway funds regardless of the applicability and meaning of Schedule B.       

            In sum, there are disputes of material fact precluding summary adjudication of Fibonacci’s declaratory relief claim.  

II. Affirmative Defenses

            Fibonacci argues that Omeira’s affirmative defenses necessarily fail if Fibonacci succeeds in its declaratory relief claim. Fibonacci also argues that the defenses are unsupported by facts.

As discussed above, there are triable issues on the declaratory relief claim. The Court finds that the defenses are properly pled in the answer. To the extent Fibonacci seeks to strike the affirmative defenses from the answer for lack of evidence, Fibonacci bears the initial burden on summary judgment to show as a matter of law that the defenses cannot possibly be supported by any evidence. (See Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 110.) Fibonacci has not attempted such a showing. Merely pointing out a lack of evidence is insufficient. (Ibid.) Thus, summary adjudication on the affirmative defenses is unwarranted.    

CONCLUSION

            Cross-Complainant Fibonacci Films, LLC’s motion for summary adjudication is DENIED.