Judge Edward B. Moreton, Jr., Case Number: 22SMCV00184, Date: 2023-11-14 Tentative Ruling

Judge: Edward B. Moreton, Jr., Case: 22SMCV00184, Date: 2023-11-14 Tentative Ruling

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 205

LEIGH COLLIER,

Plaintiff,

THE NEW MEDIA COLLECTIVE, et al.,

Defendants.

Case No.: 22SMCV00184

Hearing Date: November 14, 2023

[TENTATIVE] ORDER RE:

DEFENDANTS’ MOTION FOR

SUMMARY JUDGMENT OR, IN THE

ALTERNATIVE, FOR SUMMARY

ADJUDICATION

MOVING PARTY: Defendants Mark Dziak, Bertram van Munster, Elise Doganieri, Douglas Vargas and TNMC Group, LLC

RESPONDING PARTY: Plaintiff Leigh Collier

This action arises from a contemplated business venture which never materialized. Plaintiff Leigh Collier alleges that in 2014 she “pioneered the concept of a new media production company whereby a network of local, physical production companies would effectively be rolled up under the auspices of a single entity to develop and create programming in local and often untapped markets for global use” (the “Idea”). (Undisputed Material Facts (“UMF”) No. 1.)

Plaintiff pitched the Idea to Defendant Bertram van Munster in early 2015 (UMF No. 2), and they entered into an oral agreement to “start a new company” shortly thereafter. (UMF No. 3.) They called the prospective venture “Newco.” Plaintiff told van Munster she had access to a number of potential investors who could invest in Newco. (UMF No. 6.) Van Munster agreed to explore the possibility of starting a new company to exploit the Idea based on Plaintiff’s representation that she could find investors. (UMF No. 64.)

Neither Plaintiff nor van Munster asked for or received a confidentiality agreement to protect against disclosure of the Idea. (UMF No. 4.) The Idea was disclosed to potential investors who were not asked to agree to keep the Idea confidential. (UMF Nos. 5, 30.)

Plaintiff and van Munster agreed that Defendant Elise Dognaieri (van Munster’s wife and business partner) was to “participate in the new company.” (UMF No. 7.) They “agreed that the ownership split of the new company would be divided equally amongst them, with an additional 10% that could later be issued to future investors. (UMF No. 8.) Defendants Mark Dziak and Douglas Vargas, van Munster’s employees, were to assist in forming Newco.

In 2016, work was done to develop Newco. (UMF No. 18.) A business plan, pitch deck and a market report were created. (UMF Nos. 19-29.) Van Munster and Doganieri hired a law firm and a business advisory firm to work on Newco. (UMF No. 63.) They also paid Plaintiff $30,000 for her work on Newco. (UMF No. 42.) However, as of the end of July 2016, no investors had committed to funding Newco. (UMF No. 31.)

On July 25, 2016, Dziak wrote an email to Plaintiff, informing her they were abandoning efforts to form a new company with Plaintiff: “After a good deal of thought and internal discussion as to the possible structure, scope and even the need for a new company we have been exploring the past few months, Bertram and Elise have decided to discontinue any further consideration of a company together, and are going to probably move in a different direction. Should the situation arise where they both feel comfortable pursuing it again we will let you know.” (UMF No. 32.)

Plaintiff responded: “Very sorry to hear that but respect the decision and appreciate all of the effort everyone put in.” (UMF No. 33.) Plaintiff also asked for a separation agreement “so we can agree on elements brought into the former NewCo. In simple form, the concept I brought originally as well as relationships … I want to ensure are not part of the new direction you refer to. In the same respect, Bertram’s production partners I would not solicit going forward.” (UMF No. 34.)

On August 15, 2016, Dziak responded, stating that no separation agreement was required because “we didn’t have a formal agreement prior.” (UMF No. 35.)

As of the end of July 2016, no agreement had been reached on many open issues including (1) where Newco would be registered, (2) what respective rights of the members would be, (3) what salaries would be permitted, and (4) who would capitalize the company and how. (UMF No. 41.) There were no draft or proposed corporate governance documents for NewCo. (UMF No. 30.) There was no agreement on whether anyone would guarantee notes to investors, and no such notes were ever prepared for any investor. (UMF No. 40.)

In February 2017, Defendant TNMC Group, LLC (“TNMC”) was formed. Its members are van Munster, Doganieri, Vargas and Dziak. (UMF No. 43.) TNMC is a production company which develops and produces unscripted television programs. (UMF No. 46.) TNMC engages in the same business activities as Profiles Television Productions LLC, a production company owned by van Munster and Doganieri but it added Vargas and Dziak as owners. (UMF Nos. 47, 58.)

Plaintiff alleges that Defendants stole her Idea to form TNMC. The operative complaint alleges six claims for (1) fraud/false promise, (2) breach of fiduciary duty, (3) breach of confidence, (4) breach of oral or implied contract, (5) breach of the implied covenant of good faith and fair dealing and (6) declaratory relief.

This hearing is on Defendants’ motion for summary judgment or in the alternative for summary adjudication. Defendants argue that (1) Plaintiff cannot prove damages; (2) her claims are barred by the applicable statutes of limitations; (3) the alleged oral agreement was merely an agreement to agree and the parties never reached agreement on material terms relating to the formation of Newco, (4) there is no basis for claims of breach of contract, fraud and breach of fiduciary duty against Dziak, Vargas and/or TNMC who were not contracting parties or partners even under Plaintiff’s version of events; (5) the breach of covenant claim is duplicative of the breach of contract claim; (6) there is no evidence of fraudulent inducement, and the facts do not support a claim for promissory fraud; (7) there is no breach of confidence claim because Plaintiff disclosed the Idea without requiring any confidentiality agreements, and the Idea is not novel as two other companies were identified as engaging in the same business, and (8) there is no basis for declaratory relief.

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 Ritchfield Co. (2001) 25 Cal.4th 826, 843.) Code Civ. Proc. §437c(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. Minor 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).

As to each claim as framed by the complaint, a defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element of the claim(s) or by establishing an affirmative defense. (Code Civ. Proc. §437c(p)(2); Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) 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.)

Once the defendant has met its burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. (Id.) 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.)

EVIDENTIARY OBJECTIONS

Several of Plaintiff’s evidentiary objections do not follow the format required under Cal. Rules of Court, Rule 3.1354, as they fail to quote the specific testimony that is purportedly objectionable. For this reason, the Court overrules Objection Nos. 1-6 to the Declaration of Douglas Vargas and Objection Nos. 1-7, 12 to the Declaration of Mark Dziak. The Court also overrules, on the merits, Objection No. 7 to the Declaration of Douglas Vargas, Objection Nos. 8, 10, 11 to the Declaration of Mark Dziak, Objection Nos. 1-4 to the Declaration of Bertram Van Munster, and Objection No. 1 to the Declaration of Elise Doganieri. The Court sustains Objection No. 9 to the Declaration of Mark Dziak.

Plaintiff’s opposition to the motion for summary judgment or in the alternative for summary adjudication is an oversize brief.¿ Oppositions have a 20 page limit.¿ (Cal. R. Ct. 3.1113(d).)¿ Plaintiff filed a 21 page brief (excluding the caption page, the table of contents and the table of authorities). The Court has discretion to disregard Plaintiff’s¿oversize brief.¿ An¿oversize brief is treated the same as a¿late-filed brief. (Cal. R. Ct. 3.1113(g).)¿ The Court has discretion to disregard¿late-filed papers and therefore also has discretion to disregard oversize briefs.¿ (See¿Cal. R. Ct. 3.1300(d).) Notwithstanding, the Court will consider Plaintiff’s opposition on the merits, but cautions Plaintiff to comply with the Rules of Court.

Breach of Contract and Implied Covenant

Defendants argue that Plaintiff’s contract claims fail because the parties merely had an agreement to agree. The Court agrees.

The alleged oral contract was to “start a new company.” (UMF No. 3.) However, the parties never agreed on essential terms. The parties did not agree or even discuss (1) where the company would be registered, (2) what the respective rights of members would be, (3) what salaries would be permitted, and (4) who would capitalize the company and how. (UMF No. 41.) Even with respect to the equity split, the parties discussed a basic split between Plaintiff, van Munster and Doganieri but never determined the terms under which investors would be entitled to convert debt to equity. (UMF Nos. 8, 41.)

In Copeland v. Baskin Robbins U.S.A. (2002) 96 Cal.App.4th 1251, the Court of Appeal held that under California law an “agreement to agree” does not establish a contract if “any of the essential elements of a promise are reserved for future agreement of both parties.” (Id. at 1256.) The Copeland court explained: “While courts have been increasingly liberal in supplying missing terms to find an enforceable contract, they do so only where ‘the reasonable intentions of the parties’ can be ascertained. It is still the general rule that where any of the essential elements of a promise are reserved for future agreement of both parties, no legal obligation arises ‘until such future agreement is made.’” (Id. at 1255-1256; see also¿Autry v. Republic Productions, Inc.¿(1947) 30 Cal. 2d 144, 151 ;¿Beck v. American Health Group Int’l., Inc.¿(1989) 211 Cal. App. 3d 1555, 1563.)

While the Court in Copeland distinguished an agreement to agree from an agreement to negotiate, the latter of which can support a claim for breach of contract, Plaintiff is not alleging breach of an agreement to negotiate. Rather, Plaintiff alleges the contract was to “start a new company” where she would be given a one-third ownership stake (UMF No.3; FAC ¶49), and not an agreement to negotiate formation of a new company.

Plaintiff argues that a contract was formed because Defendants represented to third parties that they had “recently established a new company.” (Additional Material Facts (“AMF”) Nos. 37-44.) Regardless of what Defendants may have told third parties, however, there is no dispute there were essential terms left to be decided between the parties. Even Plaintiff can only identify a single term – the equity split – that was agreed to by the parties. (AMF No. 13.)

Defendants also argue that Plaintiff’s contract claims are barred by the two-year statute of limitations. However, as Plaintiff points out, affirmative defenses must be set forth in issues separate from challenging a claim because the burden of adjudicating an affirmative defense is different and “heavier than the burden to show one or more elements of the plaintiff’s cause of action cannot be established.” (Anderson v. Metalclad Insulation Corp. (1999) 72 Cal.App.4th 284, 289 (explaining that attempting to defeat a claim on the merits requires only adjudication as to one element of a claim, whereas adjudication of a defense requires adjudication of every element of that defense).) As Defendants fail to set out their affirmative defense of statute of limitations as a separate issue, the Court does not consider the defense.

Defendants next argue that Dziak, Vargas and TNMC are not contracting parties and, therefore, they cannot be liable for breach of contract or of the implied covenant. The Court agrees.

Plaintiff admitted in her deposition that she formed no contract with Dziak or Vargas. (UMF Nos. 9-10.) In response to Requests for Admissions, however, she claimed both were acting as agents of van Munster and therefore the “agency relationship created a contract.” (UMF No. 11.) But an agency relationship cannot subject an agent to liability for a principal’s breach of contract. ¿(Lippert v. Bailey¿(1966) 241 Cal. App. 2d 376, 382-284 (agent acting for a disclosed principal not¿liable for¿principal’s breach of contract);¿Hayman v. Shoemake (1962) 203 Cal.App.2d 140, 159 (in action based on contract, personal judgment against agent of disclosed principal is unjustified).)

In her opposition, Plaintiff does not address whether Dziak or Vargas were a party to the alleged oral contract to form Newco. Instead, Collier alleges they were parties to a wholly different agreement, an agreement to keep her Idea confidential. (Opp. at 19:10-18.) However, this new alleged agreement is not referenced in the breach of contract and breach of covenant claims. (FAC ¶¶49, 55.) Allegations in the Complaint delimit the scope of the issues in a motion for summary judgment or adjudication. (Juge, 12 Cal.App.4th at 67). Accordingly, these new allegations cannot be used to avoid summary judgment or adjudication.

As to TNMC, it was not formed until 2017 (UMF No 43), and therefore it could not have been a contracting party to an alleged 2015 oral contract. To the extent Plaintiff claims TNMC is the alter ego of one of the contracting parties, she has failed to meet the requirements for asserting alter ego liability. The alter ego doctrine has two general requirements: (1) there is such a unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, and (2) an inequitable result will follow if the acts of the corporation are treated as those of the corporation alone. (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300.) There is no evidence that TNMC is the alter ego of either van Munster or Doganieri. TNMC is a distinct legal entity, formed as a limited liability company. (UMF No. 43.) TNMC operates pursuant to an operating agreement, maintains a separate bank account, and does not commingle funds with any person or entity. (UMF No. 62.) There is also no proof that an inequitable result will follow unless the Court treats TNMC as the alter ego of either van Munster or Doganieri. There is no showing that van Munster and Doganieri will not be able to satisfy a judgment against them.

In opposition, Plaintiff argues that TNMC is a mere continuation of Newco. (Opp. at 19:19-27.) But Newco cannot be a party to a contract to form it, and therefore, even if TNMC was a continuation of Newco, it is still not a party to the alleged oral contract.

Accordingly, the Court grants summary adjudication of the breach of contract and breach of the implied covenant of good faith and fair dealing claims.

Plaintiff’s fraud claim is premised on two theories. First, Plaintiff alleges Defendants made a false promise that she would receive a one third ownership stake in Newco. (FAC ¶24.) Second, she alleges that Defendants fraudulently represented in July and August 2016 that “they would no longer form or pursue” the venture or “use the concepts created by Plaintiff.” (FAC ¶25.)

As to the first theory, in a promissory fraud action, “the essence of the fraud is the existence of an intent at the time of the promise not to perform it.” (Building Permit Consultants Inc. v. Mazur (2004) 122 Cal.App.4th 1400, 1414.) A promise is only false if the promisor did not intend to perform the promise when it was made. (Lazar v. Superior Court, 12 Cal.4th at 638.) “Something more than nonperformance is required to prove the defendant’s intent not to perform his promise.” (Magpali v. Farmers Group Inc. (1996) 48 Cal.App.4th 471, 481.) Here, there is no evidence that Defendants did not intend to perform at the time they made the alleged promise. To the contrary, van Munster, through his company Profiles, paid Plaintiff, an investment banker, a law firm and an advisory firm in the effort to explore the prospective venture. (UMF Nos. 42, 63.)

As to the second theory, Plaintiff claims the supposed representations are contained in the exchange of emails she had with Dziak in July and August 2016. (UMF No. 36.) But the emails only say that Defendants have decided to “discontinue any further consideration of a company together” and are going to “probably move in a different direction.” No plausible reading of these emails can convert them into a representation that Defendants “would no longer form or pursue” Newco or that they would not “use the concepts created by Plaintiff.” Indeed, Plaintiff’s request for a separation agreement to clarify that Defendants agreed not to use “the concept I brought” or the “relationships” she introduced, merely confirm that she did not consider Dziak’s statement to be a representation that they would not do so. Dziak’s response that no separation agreement was necessary because “we didn’t have a formal agreement prior” further casts doubt that any representation was made not to use the Idea.

Accordingly, the Court grants summary adjudication of the fraud/false promise claim.

Breach of Confidence

Defendants argue that Plaintiff’s breach of confidence claim fails because (1) Plaintiff disclosed the Idea to van Munster with no assurance that it would remain confidential, (2) the Idea was not novel or proprietary as two other companies were engaged in the very business Plaintiff allegedly conceived, and van Munster had the same idea years earlier, and (3) the Idea was disclosed to third parties – including potential investors – with no agreement to keep it confidential. The Court disagrees.

An essential¿element of the tort of breach of confidence is an understanding between the parties that the confidential nature of the information will be maintained.¿ (Tele-Count Engineers, Inc. v. Pacific Tel. & Tel. Co.¿(1985) 168 Cal.App.3d 455, 466; Faris v. Enberg¿(1979) 97 Cal.App.3d 309, 322-323.) While there was no written agreement, Plaintiff has raised a triable issue as to whether the parties had an oral agreement to maintain the confidentiality of the Idea.

All the work product prepared by Plaintiff in furtherance of Newco was marked confidential or private. (AMF No. 25.) Defendant van Munster expected that “of course” work product prepared in the development of Newco would be treated as confidential even though there was no written confidentiality agreement. (AMF No. 27.) Defendant Doganieri agreed that the Newco documents she received marked as confidential should have been treated as confidential and the information contained in them should have been maintained as confidential. (AMF No. 28.) Defendant Vargas admitted he maintained the confidentiality of the Newco project even though there was no written confidentiality agreement. (AMF No. 29.) Defendant Dziak told potential investors in Newco to maintain the confidentiality of their discussions. (AMF Nos. 33-36.) These facts raise a triable issue as to whether there was an oral agreement to maintain the confidentiality of the Idea.

Defendants argue that the breach of confidence claim fails for the additional reason that Plaintiff cannot prove damages. Plaintiff claims damages for breach of confidence claim equivalent to a year and half of working on the Idea which she quantifies at $450,000 (based on the average annual salary of $300,000 for an entertainment executive).¿ (AMF No. 17, 67.)¿ Based on the foregoing, she has created a triable issue of damages.¿

Accordingly, the Court denies summary adjudication of the breach of confidence claim.

Breach of Fiduciary Duty

The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, breach of fiduciary duty and damages. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.)

Because the Court has concluded there was no agreement, there can also be no partnership creating a fiduciary duty. (Levine v. Montalba Architects, 2022 Cal. Super. LEXIS 1702 at *13 (no fiduciary relationship where there was no contract establishing the fiduciary relationship).)

Additionally, Defendants argue (and the Court agrees) that Plaintiff has no breach of fiduciary duty claim against Dziak and Vargas because Plaintiff confirmed at deposition they were not her partners, and she never agreed that they would have any equity in Newco. (UMF Nos. 16-17.)

Accordingly, the Court grants the motion for summary adjudication as to the breach of fiduciary duty claim.

Plaintiff seeks a declaration that she is entitled to “[one third] of the value of TNMC and its past profits as well as all other profits and benefits enjoyed by DEFENDANTS as a result of their wrongdoing.” (FAC ¶59.) Plaintiff’s declaratory relief action is derivative of her contract claim which the Court has summarily adjudicated against Plaintiff. Therefore, Plaintiff’s declaratory relief claim fails for the same reasons her contract claim fails.