Judge: Gail Killefer, Case: 24STCV12819, Date: 2025-01-21 Tentative Ruling

Case Number: 24STCV12819    Hearing Date: January 21, 2025    Dept: 37

HEARING DATE:                 Tuesday, January 21, 2025

CASE NUMBER:                   24STCV12819

CASE NAME:                        John Corella v. Jeffrey Collins

MOVING PARTY:                 Defendant Jeffrey Corella

OPPOSING PARTY:             Plaintiff John Corella

TRIAL DATE:                        Not Set

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrer to FAC

OPPOSITION:                        7 January 2025

REPLY:                                  13 January 2025

TENTATIVE:                         Defendant’s demurrer is sustained with leave to amend. Plaintiff is granted 10 days leave to amend. The court sets the OSC RE: Amended Complaint for February 13, 2025, at 8:30 a.m. The Case Management Conference, now scheduled for January 30, 2025, is advanced to today and continued to February 13, 2025, at 8:30 a.m.  Defendant to give notice.

Background

On May 21, 2024, John Corella (“Plaintiff”) filed a Complaint against Jeffrey Collins (“Defendant”) and Does 1 to 10. The original Complaint alleged four causes of action: (1) breach of fiduciary duty, (2) fraud, (3) conversion, and (4) money had and received.

On October 3, 2024, Plaintiff filed the operative First Amended Complaint (“FAC”) alleging a single cause of action for breach of fiduciary duty.

Defendant now demurs to the FAC. Plaintiff opposes the Motion. The matter is now before the court.

Demurrer[1]

I.                Legal Standard

Where pleadings are defective, a party may raise the defect by way of a demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257, 262.) A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters.¿ (CCP, § 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In evaluating a demurrer, the court accepts the complainant’s properly pled facts as true and ignores contentions, deductions, and conclusory statements. (Daar v. Yellow Cab Co. (1976) 67 Cal.2d 695, 713; Serrano v. Priest (1971) 5 Cal.3d 584, 591.) Moreover, the court does not consider whether a plaintiff will be able to prove the allegations or the possible difficulty in making such proof. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604.) 

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿ The burden is on the complainant to show the Court that a pleading can be amended successfully. (Ibid.)

II.        Discussion

On or about January 14, 2011, Plaintiff, Defendant, and Bryan Stinson signed an Attachment Agreement, entering a joint venture and agreeing to split the profits associated with the development of the TV show “Dance Moms.” (FAC, ¶¶ 29, 31-38, Ex. B.) “Dance Moms” aired from 2013 to 2019, and between 2013 to 2018 Plaintiff was paid by entities belonging to Defendant, but payment ceased in the Winter of 2018. (Id. ¶¶ 42-26, 57.) Defendant refused Plaintiff’s requests for accounting. (Id., ¶¶ 61, 62, 71.) In 2019, Plaintiff did not receive royalties and in December 2019 “Dance Moms” was cancelled. (Id. ¶¶ 62, 66.)

On May 28, 2020, Plaintiff received an email from Bryan Stinson that displayed all royalty payments for “Dance Moms.” (FAC, ¶ 72, Ex H. ) Plaintiff learned that Defendant had not paid the full amount owed to Plaintiff under the Attachment Agreement. (Id., ¶¶ 75, 76.) The FAC alleges that “Defendant had acted to conceal and prevent Plaintiff from reviewing or possessing the network royalty statements” and “misrepresented and deceived [Plaintiff] regarding the amounts that Corella was owed from 2013 to 2019.” (Id. ¶¶ 78, 80.) Defendant never notified Plaintiff that he was due episodic fees for “Dance Moms.” (Id., ¶ 84.)

The First Amended Complaint alleges:

Based on the review of the statements provided by Stinson, Collins knowingly misrepresented and concealed the amounts owed to Plaintiff in the following amounts:

A. $229,445.33 in unpaid royalties for Dance Moms from 2013-2019

B. $57,437.50 in royalties for Dance Twins in 2018.

C. $88,650.00 in episodic fees for Season 8 of Dance Moms

D. Unknown Episodic fees for the Spin Off Series Raising Asia in an amount according to proof but no less than $74,000.00.

(FAC, ¶ 86.) Plaintiff asserts that Defendant failed to disclose and inform Plaintiff about the accurate amounts owed to Plaintiff “in a deliberate fashion and specifically to harm Plaintiff and in breach of Defendant’s fiduciary duty to Plaintiff his partner co-joint venturer.” (Id., ¶ 101.)

A.        Plaintiff’s Single Cause of Action for Breach of Fiduciary Duty is Time-Barred

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Meister v. Mensinger (2014) 230 Cal.App.4th 381, 395.) A fiduciary relationship is “any relation existing between parties to a transaction wherein one of the parties is duty bound to act with the utmost good faith for the benefit of the other party.” (Cleveland v. Johnson (2012) 209 Cal.App.4th 1315, 1338.) “[E]xamples of relationships that impose a fiduciary obligation to act on behalf of and for the benefit of another are ‘a joint venture, a partnership, or an agency.’ [Citation.]” (Id. at p. 1339.)

First, Defendant demurs to the FAC on the basis that a profit-sharing agreement such as the Attachment Agreement does not give rise to a fiduciary duty. The FAC and Attachment Agreement support the finding that the Parties were part of a joint venture entered for a common purpose that gave the Defendant the right to “develop, produce and exploit the Series” (FAC, Ex. B, ¶ 1) for joint profit and mutual benefit as opposed to “nonmutual profit that is absent in fiduciary relationships.” (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 33.) Therefore, the FAC pleads sufficient facts to show that Parties are part of a joint venture and Defendant was in a fiduciary relationship with Plaintiff.

Second, Defendant demurs to the FAC on the basis that the single cause of action for breach of fiduciary duty sounds in fraud and is barred by a three year statute of limitations. “The statute of limitations for breach of fiduciary duty is three years or four years, depending on whether the breach is fraudulent or nonfraudulent.” (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1479.)

“The statute of limitations that applies to an action is governed by the gravamen of the complaint, not the cause of action pled.” (City of Vista v. Robert Thomas Securities, Inc. (2000) 84 Cal.App.4th 882, 889.) In City of Vista, the gravamen of the Plaintiff’s complaint was that the defendant’s “acts constituted actual or constructive fraud,” thus [t]he applicable statute of limitations for fraud is three years.”(Id. at p. 889.) “Breach of fiduciary duty not amounting to fraud or constructive fraud is subject to the four-year ‘catch-all statute’ of Code of Civil Procedure section 343.” (William L. Lyon & Associates, Inc. v. Superior Court (2012) 204 Cal.App.4th 1294, 1312.)

Plaintiffs’ opposition fails to persuade the court that the breach of fiduciary claim is not premised on fraud. The FAC reflects that the gravamen of Plaintiff’s claim is that Defendant concealed, misrepresented, and deceived Plaintiffs as to the amount of payment due to Plaintiff. (FAC, ¶¶ 80, 90.) The FAC alleges that Defendant breached the duty of loyalty and good faith by failing to provide accounting in 2018 and 2019 and by concealing and misrepresenting to Plaintiff the revenue due to him for “Dance Moms.” Accordingly, the court agrees that Plaintiff’s breach of fiduciary claim is time-barred.

Plaintiff’s opposition asserts that the Attachment Agreement remains valid, and that Plaintiff is entitled to royalties and episodic revue as Dance Moms continues to air. However, no such allegation is made in the FAC. Allegations not included in the pleadings are presumed not to exist. (Schick v. Lerner (1987) 193 Cal.App.3d 1321, 1327.)

If Plaintiff is still owed royalties and episodic revenue, then Plaintiff’s claims are not stale under the theory of continuous accrual. “[U]nder the theory of continuous accrual, a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period.” (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1192.) Similarly, Plaintiff’s claim for breach of fiduciary duty survives, if Plaintiff can show that Defendant continued to breach his fiduciary duties after May 21, 2021.

The demurrer is sustained with leave to amend.

Conclusion

Defendant’s demurrer is sustained with leave to amend. Plaintiff is granted 10 days leave to amend. The court sets the OSC RE: Amended Complaint for February 13, 2025, at 8:30 a.m. The Case Management Conference, now scheduled for January 30, 2025, is advanced to today and continued to February 13, 2025, at 8:30 a.m.  Defendant to give notice.