Judge: Mark H. Epstein, Case: 24SMCV03136, Date: 2025-02-05 Tentative Ruling

Case Number: 24SMCV03136    Hearing Date: February 5, 2025    Dept: I

The demurrer is SUSTAINED IN PART AND OVERRULED IN PART.  Plaintiff sues defendant for breach of contract and fraud and related causes of action.  Plaintiff asserts that he is the heir of certain rights to intellectual property owned by his father, the songwriter Skip Scarborough.  Plaintiff sought to obtain a loan against those rights and asked the music label with whom he had a relationship for such a loan.  The company told him they did not do that sort of thing, but referred him to defendant.  In 2009, plaintiff and defendant signed a contract.  In it, defendant purported to buy the rights to various works for $40,000.  However, plaintiff had the right to buy back those rights within 15 years for $1.00.  That right, however, was subject to defendant’s right to buy out the option.  The buy out right could be exercised even after plaintiff gave notice of his $1.00 buy back right, and it required defendant to give plaintiff an additional 40% of the purchase price, or $16,000.  According to plaintiff, he was snookered.  Defendant’s principal allegedly never gave him a chance to review the contract carefully, refused to allow him to show the contract to a lawyer (although the contract says otherwise), assured him that he was only leasing the rights (not selling them), and did not tell plaintiff that his right to get the rights back for a $1.00 was subject to the $16,000 option.  When plaintiff notified defendant that he wanted to exercise the $1.00 option, he learned that defendant would not allow him to do so because it intended to exercise its right to buy out the option for $16,000 (although defendant agreed to go a bit higher).  Plaintiff sued.

Defendant demurs, claiming this is seller’s remorse.  Plaintiff claims that he was defrauded and also that defendant is breaching the contract by refusing to sell him back the rights for $1.00. 

Essentially, the court agrees with the defense on the contract.  The contract is actually pretty plainly written.  The court does not see how it is that defendant has breached by exercising its right to buy out the buy back; that is something that the contract expressly permits and the court just does not understand how plaintiff is construing the contract to say anything different.  Because of that, at least unless plaintiff can articulate some construction that works for him, the court must SUSTAIN the causes of action for breach of contract and breach of the covenant of good faith and fair dealing.  The court will grant leave to amend, however, to see if plaintiff can plead around this.

The court is also inclined to SUSTAIN the demurrer as to the eighth cause of action.  That is for injunction, but injunction is not a cause of action; it is a remedy.  Plaintiff can amend, though, to re-cast it in that manner.  For the same reason, the fifth cause of action fails.  Unjust enrichment is not a cause of action; it is another way of saying restitution, which is a remedy.  It might well be the measure of recovery for fraud, but it is not a standalone cause of action.  Again, plaintiff can recast this as a remedy when plaintiff amends.  Unconscionability is also not a cause of action.  It is a basis to defeat a cause of action for breach of contract, but it is not itself a cause of action.  (California Grocers Assn. v. Bank of America (1994) 22 Cal.App.4th 205.)

The court OVERRULES the demurrer as to the fraud cause of action and Business and Professions Code section 17200.  Fraud is a way out of a contract.  To the extent plaintiff can prove that defendant misrepresented to him that he would be able to recover the rights for $1.00, and the other elements of fraud, that would be enough.  While the contract did reflect that right, it also had a strong limitation, and not telling plaintiff of the limitation (and suggesting the contrary) is potentially a form of fraud.  The court believes that there is sufficient detail in the complaint to withstand demurrer.  And since fraud is one way of establishing  a section 17200 claim, that cause of action withstands demurrer as well.  The statute of limitations is no bar.  Plaintiff contends that he did not discover the fraud until he tried to buy back the rights and defendant refused.  That will suffice for a pleading motion.  The court will also OVERRULE  the Civil Code section 1572 cause of action.  It essentially duplicates the fraud cause of action and survives for the same reason.

Therefore, the demurer is SUSTAINED WITH 30 DAYS’ LEAVE TO AMEND IN PART AND OVERRULED IN PART.  The motion to strike is DENIED.