Judge Teresa A. Beaudet, Case Number: 24STCV32498, Date: 2025-04-28 Tentative Ruling

Plaintiff Magenta Light Productions, Inc. (“Plaintiff”) filed this action on December 10, 2024, against Defendants Spellbinder, LLC (“Spellbinder”), Myosin, Inc. (“Myosin”), Sean Clayton (“Clayton”), Grant Cramer (“Cramer”), and Chad Doher (“Doher”) (collectively “Defendants”). The Complaint alleges causes of action for (1) breach of contract, (2) fraudulent inducement, (3) fraud, (4) money had and received, and (5) accounting.

Defendants now demur to the first three causes of action of the Complaint. Plaintiff opposes. Defendants replied.

As an initial matter, Defendants’ counsel’s declaration demonstrates that the parties met and conferred in person, by telephone, or by video conference.

Pursuant to Code of Civil Procedure section 430.41, subdivision (a), “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person, by telephone, or by video conference with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” Such meeting and conferring must be done in good faith with an effort to try to resolve the issues subject to the demurrer.

Defendants’ counsel’s declaration filed in support of the demurrer states “[o]n February 13, 2025, I met and conferred with counsel for Plaintiff Magenta Light Productions, Inc. by telephone regarding the arguments raised in Defendants’ demurrer. Counsel and I then spoke again by phone on February 18, 2024, to further meet and confer. Despite these good faith meet and confer calls, the parties were unable to reach an agreement on the matters raised by Defendants’ demurrer.” (Cammiso Decl., ¶ 3.) The Court finds this complies with Code of Civil Procedure section 430.41, subdivision (a). Thus, the meet and confer requirement is satisfied.

In the Complaint, Plaintiff alleges that it holds the rights to distribute and market the film “Strange Darling” (“Picture”) in the United States and other territories. (Complaint, ¶ 15.) In early 2024, Plaintiff approached Doher and Cramer regarding financing and investing in the Picture’s theatrical release. (Complaint, ¶ 17.) Doher and Cramer informed Plaintiff that Spellbinder financed and invested its own funds for theatrical releases, typically matching the distributor’s marketing spend. (Complaint, ¶ 17.) “Plaintiff had wanted to partner with Spellbinder solely so that Spellbinder would finance and invest into the marketing of the Picture” for its theatrical release and “notified Doher and Cramer that it did not need or want Spellbinder to provide a media plan or media buying services.” (Complaint, ¶ 18.) But Plaintiff alleges that Doher and Cramer promised that Spellbinder would “target the most effective media placements and optimize bidding” and “present real-time updates on media spending and results to Plaintiff” to persuade Plaintiff to agree to a media plan service. (Complaint, ¶ 18.)

In mid-April, during a meeting between the parties, “Doher and Cramer promised that Spellbinder would provide invoices and receipts for all media purchased, as well as post-run reports detailing the effectiveness of the spend.” (Complaint, ¶ 19.) Later, Plaintiff requested documentation to show that Spellbinder’s funds matched Plaintiff’s cash investment of one million dollars, to which Spellbinder responded with a screenshot of a bank statement showing $1,000,045.00. (Complaint, ¶ 20.) Plaintiff alleges that it entered into a Motion Picture Media Services & Investment Agreement (“Agreement”) with Spellbinder on May 3, 2024, “in reliance on the promises Doher and Cramer repeatedly made regarding Spellbinder’s ability to pay its 50% share of media costs, deliver on the media plan” and regularly provide invoices and other spending information. (Complaint, ¶ 21.)

Plaintiff and Spellbinder agreed to a minimum two-million-dollar-spend for the Picture’s theatrical release, with each party contributing half. (Complaint, ¶ 22, Exh. A.) Plaintiff wired one-million-dollars to Spellbinder to cover its portion. (Complaint, ¶ 23, Exh. A.) Spellbinder was required to use the two-million-dollars to pay media providers directly, and negotiate terms for advertising on the various platforms. (Complaint, ¶ 24-25, Exh. A.) Spellbinder agreed to monitor the performance of advertising and to notify Plaintiff of any underperformance. (Complaint, ¶ 25, Exh. A.) Plaintiff alleges that Spellbinder failed to notify Plaintiff of underperformance and falsely represented overperformance in breach of the Agreement. (Complaint, ¶ 25, Exh. A.) When Plaintiff asked for the transparency around media spending that parties agreed upon, “Spellbinder encouraged Plaintiff to ‘have a little faith’ in Spellbinder’s expertise.” (Complaint, ¶ 26.) Plaintiff alleges that “Doher promised that a dashboard providing live updates regarding media spend and success would be provided” though the dashboard ultimately did not function the way it was promised to work. (Complaint, ¶ 27.)

In early July, “Plaintiff noted that pricing for certain aspects of the plan had been identified as variable when it should have been fixed” but Spellbinder did not explain why, and Plaintiff alleges Spellbinder “refused to provide documentation with the level of detail needed to confirm the actual amounts paid for early spending pursuant to the plan.” (Complaint, ¶ 31.) Spellbinder also notified Plaintiff that they were behind in executing the second phase of the Media Plan. (Complaint, ¶ 32.) Spellbinder “claimed that it required funds from Plaintiff to commence negotiating any media spending, even though Spellbinder was responsible for paying half of the costs.” (Complaint, ¶ 32.) In response to Plaintiff’s repeated requests for documentation showing amount spent on the Media Plan, Spellbinder instead provided invoices for its services, which Plaintiff alleges did not help Plaintiff confirm that Spellbinder was executing the Agreement. (Complaint, ¶ 33.)

In the summer of 2024, “Plaintiff learned that Spellbinder was partnering with Myosin, a marketing agency that purports to provide services similar to Spellbinder’s,” though Myosin was not included in the Agreement initially. (Complaint, ¶ 28.) “In late June 2024, Plaintiff and Spellbinder agreed to a plan entitled ‘Strange Darling Media Plan Sign Off and Insertion Order’ (“Media Plan”) for the Media Spend.” (Complaint, ¶ 29.) The Media Plan was divided into three phases with staggered execution dates and Spellbinder projected that it would generate “nearly 123 million impressions,” which Plaintiff alleges it did not do. (Complaint, ¶ 29.) There are two versions of the Media Plan: the first, signed by Spellbinder on June 26, 2024, indicates that Myosin would provide the services; the second, signed by Spellbinder on June 29, 2024, indicates that Spellbinder would provide the services. (Complaint, ¶ 30.) The Court notes that neither version of the Media Plan has been submitted. Plaintiff alleges “that Spellbinder and Myosin operate as a single entity and identify themselves separately only for purposes of evading liability.” (Complaint, ¶ 30.)

When the Picture was released, it “generated only $1.1 million its opening weekend, significantly below the box office expected for a film of this genre (horror), media campaign, reviews and broad theatrical release.” (Complaint, ¶ 34.) Plaintiff alleges this is because Spellbinder failed to follow the Media Plan; failed to contribute its one-million-dollars of the Media Plan; failed to spend the entirety of the Media Plan; and used fraudulent methods, like buying followers on Instagram, to create the appearance of a “broad and successful marketing campaign.” (Complaint, ¶ 34-36.)

Plaintiff notified Clayton, Cramer, and Doher (the founders of Spellbinder) about these issues via email in late September 2024, and “requested an accounting of the money spent by Spellbinder” on the Media Plan, along with a “copy of the contract between Spellbinder and Myosin.” (Complaint, ¶ 37.) Doher responded, claiming that Plaintiff is responsible for the Picture’s performance and that the Media Plan is the contract between Spellbinder and Myosin. (Complaint, ¶ 38.) “Spellbinder provided a ‘Proof of Delivery’ document that purported to identify the impressions generated through different strategies and platforms and not cash or even cash value spent, but provided limited, sometimes redacted, incomplete, unsigned, and unverified backup, such as partial screenshots of platform-specific advertiser dashboards, unsigned affidavits without verification of cash spent, and single-page summaries of marketing spend for a select few media outlets.” (Complaint, ¶ 39.) Plaintiff alleges that it has “lost not less than ten million dollars ($10,000,000) in potential profits from the distribution of the Picture.” (Complaint, ¶ 40.)

Plaintiff has alleged facts sufficient to state a cause of action for breach of contract in its Complaint. To state a cause of action for breach of contract, Plaintiff must allege “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

In the Complaint, Plaintiff alleges “[t]he Agreement is a valid and enforceable contract between the parties” and “Plaintiff performed all material obligations owed pursuant to the Agreement.” (Complaint, ¶ 43-44.) Here, Plaintiff attached a copy of the Agreement to its Complaint, showing the existence of a contract. (Complaint, Exh.A.) Plaintiff alleges in its Complaint that it has performed its part of the Agreement, which Defendants do not dispute in their demurrer. (Complaint, ¶ 23, Exh. A; Demurrer, pp. 4-5.) The Court finds the Complaint alleges facts sufficient to state a claim regarding the first and second elements of breach of contract.

Plaintiff alleges, that “Spellbinder breached the Agreement by failing to purchase media as agreed in the Media Plan, by failing to contribute its portion of the Media Spend, by failing to provide services at the standard expected for a United States film release, by failing to notify Plaintiff of underperformance of media purchased by Spellbinder, and by failing to cooperate with Plaintiff’s requests for information about the Media Spend.” (Complaint, ¶ 45.) In the demurrer, Defendants assert that “Plaintiff cannot establish that Defendants caused these damages...” (Demurrer at p. 4:21.) Defendants argue that they cannot be responsible for the Picture underperforming due to the following reasons: Defendants were “simply hired to provide advertising and media services to promote the project” (Demurrer at p. 5:1-2.); the Agreement states “Plaintiff had sole and exclusive control over the distribution, marketing and promotion of the Picture” (Demurrer at p. 5:13-14.); and the Agreement states that Spellbinder made “no representation or warranties as to the total number of viewer impressions or the revenue generating performance of any advertising that [Spellbinder] purchases under the Approved Media Plan” (Demurrer at p. 5:16-18.). Defendants further assert that any underperformance was “because Plaintiff made a subpar film—not because Defendants failed to market it.” (Demurrer, p. 5:20-21.) Yet, Plaintiff alleges in the Complaint that Defendants lacked transparency around the minimum two-million-dollar media spend. (Complaint, ¶¶ 18-19, 21-22, 26, 31, 33-37, 39.) Additionally, in opposition, Plaintiff asserts that Defendants “refus[ed] to provide documentation with sufficient detail to adequately track the use of the overall Media Spend.” (Opposition, p. 6:9.) This is the primary factual allegation made to support the alleged breach of contract. Defendants do not dispute Plaintiff’s claim that Defendants failed to provide the invoices and documentation previously agreed upon. The Court finds the Complaint alleges facts sufficient to state a claim regarding the third element of breach of contract.

Plaintiff also alleges that “[a]s a direct and proximate result of Spellbinder’s breaches, Plaintiff has been harmed … not less than the portion of the one million dollars ($1,000,000) contributed by Plaintiff for execution of the Media Plan that went unspent; amounts Spellbinder failed to contributed [sic] to the Media Spend, up to one million dollars ($1,000,000) in cash or cash equivalents; and damages from the underperformance of the Picture caused by Spellbinder’s breach of the Agreement, which Plaintiff estimates to exceed ten million dollars ($10,000,000).” (Complaint, ¶ 46.) In the demurrer, Defendants assert “Plaintiff cannot establish that … such damages are even recoverable as a matter of law.” (Demurrer at p. 4:22.) To support this, Defendants argue that Plaintiff cannot plead damages with reasonable certainty, citing to Sargon Enterprises, Inc. v. University of Southern California, (2012) 55 Cal.4th 747, 773, which states “[l]ost profits may be recoverable as damages for breach of a contract … where the evidence makes reasonably certain their occurrence and extent.” Defendants additionally cite to four other California state cases to show that “lost profits are not recoverable in entertainment ventures” because they are speculative and uncertain:

“See, e.g., Lemat Corp. v. Barry (1969) 275 Cal.App.2d 671, 680 (lost profits unavailable for basketball player's breach of contract because they were “speculative and uncertain and practically impossible to ascertain”); Darmour Prod. Corp. v. H.M. Baruch Corp. (1933) 135 Cal.App. 351, 354 (producer denied lost profits because “they would seem to be highly speculative”); Alder v. Drudis (1947) 30 Cal.2d 372, 382 (prospective profits were too speculative given uncertain commercial viability of machine to produce three dimensional motion pictures); Zorich v. Petroff, (1957) 152 Cal.App.2d 806, 811 (rejecting future profits claim as speculative despite fact that film at issue had been released and thus had track record)…”
(Demurrer at p. 6:8-15.)

In opposition, Plaintiff reiterates from the Complaint that Defendants’ “failure to follow the Media Plan or utilize the full Media Spend under the Agreement caused the Picture to fail to generate the revenue commensurate with its quality and the scope of its release.” (Opposition, p. 6: 19-20.) Plaintiff further asserts that Defendants’ argument “hinges on the amount of [Plaintiff’s] damages, not whether damages in fact exist.” (Opposition, p. 8:18-19.) In response to the cases Defendants cite in the demurrer, Plaintiff asserts that six of the eight California cases are distinguishable base on procedural posture. (Opposition, p. 9:1-4.) A remaining case, Darmour Prod. Corp., v. H.M. Baruch Corp., (1933) 135 Cal.App. 351, is distinguishable in its facts. (Opposition, p. 9:12-13.) Darmour concerns a production company that lost its leading actress in a film after the actress was injured due to the production company’s own negligence. (Darmour Prod. Corp., v. H.M. Baruch Corp., supra, 135 Cal.App. at 352.) The Darmour court held that the production company’s complaint did not allege how the lost work was due to the actress’s injury, and that the production company alleged the actress could be replaced, though not easily. (Darmour Prod. Corp., v. H.M. Baruch Corp., supra, 135 Cal.App. at 353-54.) In their reply, Defendants do not address or seek to resolve this distinction. The other remaining case, Williams v. Krumsiek, (1952) 109 Cal.App.2d 456, appears to support Plaintiff’s position. (Opposition, p. 9:14-15.) In Williams, the Fourth District Court of Appeal held that “[w]hile damages, which are purely speculative, fanciful and imaginary cannot be recovered, it is also true that if the benefits claimed were reasonably certain to have been realized but for the wrongful act of the opposing party, recovery should be allowed.” (Williams v. Krumsiek, supra, 109 Cal.App.2d at 459.) In their reply, Defendants do not revisit the viability of Williams for its argument, but simply restate the finding in Sargon Enterprises, Inc. v. University of Southern California. (Reply, p. 3:1-4; Sargon Enterprises, Inc. v. University of Southern California, supra, 55 Cal.4th at 773.) The Court finds that based on the numbers put forth by the Plaintiff on media spend and advertising, the Complaint alleges facts sufficient to state a claim regarding reasonably certain damages.

Based on the foregoing, the Court OVERRULES Defendant’s demurrer to the first cause of action of the Complaint.

D. Second Cause of Action for Fraudulent Inducement and Third Cause of Action for Fraud Against All Defendants

In the second cause of action, Plaintiff alleges “Clayton, Cramer, and Doher … promised that Spellbinder would invest one million dollars of its own funds in connection with the theatrical release of the Picture” and would use those funds on marketing spend. (Complaint, ¶ 48.) In the third cause of action, Plaintiff alleges that “Clayton, Cramer, and Doher all promised Plaintiff … that Spellbinder would provide transparency throughout its partnership with Plaintiff, including providing invoices to support the media spend and live updates regarding the success of the various media campaigns Spellbinder was managing.” (Complaint, ¶ 55.)

Plaintiff claims that “Defendants knew at the time they made these representations that Spellbinder would not … invest its own funds on marketing spend for the Picture” nor did Spellbinder have any “intention of providing the services or transparency as agreed in the Media Plan at the time that the Agreement was executed.” (Complaint, ¶¶ 49, 57.) Plaintiff further alleges that these false representations were made “with the intent of inducing Plaintiff to execute the Agreement and subsequently transfer one million dollars to Spellbinder.” (Complaint, ¶ 50.) Additionally, Plaintiff claims that it justifiably relied on these representations, resulting in the Picture “fail[ing] to generate revenue commensurate with its quality” and damages “not less than ten million dollars.” (Complaint, ¶ 52-53, 58-61.)

In its demurrer, Defendants cite Building Permit Consultants, Inc. v. Mazur, 122 Cal.App.4th 1400, 1414 (2004), to argue “mere failure to perform a promise made in good faith does not constitute fraud.” (Demurrer at p. 7:17-18.) Defendants also cite Food Safety Net Services v. Eco Safe Systems USA, Inc., (2012) 209 Cal.App.4th 1118, 1132, explaining “[t]o state a claim for fraud separate from a contract claim, a plaintiff must allege tortious conduct that is conceptually distinct from the contract.”[1] The plaintiffs are “limited to contract damages and the tort claims should be dismissed as duplicative” unless plaintiff “can demonstrate harm above and beyond a broken contractual promise.” (Robinson Helicopter Co. v. Dana Corp., (2004) 34 Cal.4th 979, 988.) Defendants argue that the misrepresentations Plaintiff points to for the fraudulent inducement and fraud causes of action stem from the breach of contract cause of action. (Demurrer at p. 9:20-21, 26-27.) As such, Defendants argue that the identical damages requested under the breach of contract claim and fraud claims indicates that Plaintiff has not suffered “harm above and beyond a broken contractual promise.” (Demurrer, p. 10:15-16; Reply, p. 9:25-28; Robinson Helicopter Co. v. Dana Corp., supra, 34 Cal.4th at 988.) Further, Defendants note that the identical harm resulting from the contract and the fraud claims indicates that Plaintiff has not suffered loss beyond the breach of contract. (Reply, p. 10:1-2.)

In its opposition, Plaintiff asserts that “fraudulent inducement of contract[] is not a context where the traditional separation of tort and contract law obtains. To the contrary, this area of the law traditionally has involved both contract and tort principles and procedures.’” (Toyo Tire Holdings of Ams. Inc. v. Ameri and Partners Inc., (2024) 753 F.Supp.3d 966, 979 (citation omitted).) In Toyo Tire, “the plaintiff alleged numerous facts supporting fraudulent inducement based on defendant’s alleged misrepresentations that is separate and apart from the alleged breach of contract,” even though defendant argued the fraudulent inducement claim was “based on the same underlying factual allegations” as the breach of contract claim. (Opposition, p. 13:22-26; Toyo Tire Holdings of Ams. Inc. v. Ameri and Partners Inc., supra, 753 F.Supp.3d at 979.) In their reply, Defendants challenge Plaintiff’s reliance on this case, arguing that the “misrepresentations giving rise to the fraudulent inducement claim were outside the scope of the contract, i.e. they were not contract terms.” (Reply, p 4: 25-26.) But this case is a non-binding federal district court opinion, which Defendants also point out in their reply. (Reply, p. 3:11-15.)

The Court notes that the Plaintiff properly alleges the names of those allegedly making false representations, identifying them as principals of Spellbinder, what representations they made, and the dates on which they made those representations. Yet, the alleged misrepresentations stem from the breach of contract claim: that Spellbinder would invest one million dollars of its own funds in marketing under the Agreement and Media Plan, and Spellbinder would send Plaintiff documentation tracking Defendants’ media spend. In their reply, Defendants draw comparisons between the misrepresentations alleged and corresponding contractual terms. (Reply, pp. 6-7.) These restatements of contractual obligations as the basis for the fraud causes of action indicate that the allegations of fraud and fraudulent inducement are not separate and apart from the breach of contract cause of action.

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 [“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”].) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In its opposition, Plaintiff asserts that it can remedy any perceived defects. (Opposition, p. 15:1-2.)

Based on the foregoing, the Court SUSTAINS Defendant’s demurrer to the second and third causes of action of the Complaint with leave to amend.

The Court SUSTAINS Defendant’s demurrer to the second and third causes of action, with leave to amend.

[1] This quote does not appear in the Food Safety case though the reference to “conceptually distinct from the contract” does appear at the cited page of the case.

Superior Court of California

County of Los Angeles

Department 50