QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP Eric J. Emanuel (Bar No. 102187) Naomi J. Harlin (Bar No. 204740) 2 865 South Figueroa Street, 10th Floor Los Angeles, California 90017-2543 3 Telephone: (213) 624-7707 Facsimile: (213) 624-0643 4 Attorneys for Defendants 5 T Minus 30 Films, David Suissa and Bruce Miller 1 6 7 8 9 10 11 12 OWEN ENTERTAINMENT GROUP, INC. dba SALVO FILMS, a California Corporation; and LESLIE OWEN, an individual, 13 Plaintiffs, 14 v. 15 T MINUS 30 FILMS, a California Corporation; JOHN CLARK, an individual; DAVID 16 SUISSA, an individual; BRUCE MILLER, an individual, and Does 1 through 30, inclusive, 17 18 19 20 21 22 23 24 25 26 27 28
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SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES
Defendants.
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
TO PLAINTIFFS AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on May 28, 2002, at 8:30 a.m., or as soon thereafter as the matter may be heard, in Department 69 of the above-entitled Court, located at 111 North Hill Street, Los Angeles, California 90012, defendants T Minus 30
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 Films, David Suissa and Bruce Miller (collectively, "TM30") will, and hereby do, generally 2 and specifically demur to the second through seventh purported causes of action of the First 3 Amended Complaint of plaintiffs Owen Entertainment Group, Inc., dba Salvo Films, and 4 Leslie Owen (collectively, "plaintiffs") on file in this action. This demurrer is made 5 pursuant to Cal. Civ. Proc. Code ' 430.10 (e) and (f), on the grounds that the second 6 through seventh causes of action against TM30 (a) fail to state facts sufficient to constitute 7 a cause of action against TM30, and (b) are uncertain and ambiguous. Because plaintiffs 8 cannot cure the defects in the complaint, TM30's demurrer should be sustained without 9 leave to amend. 10 This demurrer is based on this notice, the accompanying demurrer and
11 memorandum of points and authorities, all matters of which this Court may take judicial 12 notice, the pleadings and other papers on file in this action, and such further evidence and 13 arguments as may be presented at or before the hearing on this demurrer. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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DATED: April 29, 2002 QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP
By Naomi J. Harlin Attorneys for Defendants T Minus 30 Films, David Suissa and Bruce Miller
2
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 2 3
DEMURRER
Defendants T Minus 30 Films, David Suissa and Bruce Miller (collectively
4 "TM30") hereby demur to the second through seventh causes of action of the First 5 Amended Complaint on the following grounds: 6 7 8 9 1. TM30 demurs to the purported second cause of action for breach oral DEMURRER TO SECOND CAUSE OF ACTION
10 contract (sale of business) on the ground that it fails to state facts sufficient to constitute a 11 cause of action. See Cal. Civ. Proc. Code ' 430.10(e). 12 2. TM30 demurs to the purported second cause of action for breach oral
13 contract (sale of business) on the ground that it is uncertain. See Cal. Civ. Proc. Code 14 ' 430.10(f). 15 16 17 18 3. TM30 demurs to the purported third cause of action for breach of the DEMURRER TO THIRD CAUSE OF ACTION
19 implied covenant of good faith and fair dealing (sale of business) on the ground that it fails 20 to state facts sufficient to constitute a cause of action. See Cal. Civ. Proc. Code 21 ' 430.10(e). 22 4. TM30 demurs to the purported third cause of action for breach of the
23 implied covenant of good faith and fair dealing (sale of business) on the ground that it is 24 uncertain. See Cal. Civ. Proc. Code ' 430.10(f). 25 26 27 28
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1
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 2 3 5.
DEMURRER TO FOURTH CAUSE OF ACTION
TM30 demurs to the purported fourth cause of action for account
4 stated on the ground that it fails to state facts sufficient to constitute a cause of action. See 5 Cal. Civ. Proc. Code ' 430.10(e). 6 6. TM30 demurs to the purported fourth cause of action for account
7 stated on the ground that it is uncertain. See Cal. Civ. Proc. Code ' 430.10(f). 8 9 10 11 7. TM30 demurs to the purported fifth cause of action for breach DEMURRER TO FIFTH CAUSE OF ACTION
12 contract (employment agreement) on the ground that it fails to state facts sufficient to 13 constitute a cause of action. See Cal. Civ. Proc. Code ' 430.10(e). 14 8. TM30 demurs to the purported fifth cause of action for breach
15 contract (employment agreement) on the ground that it is uncertain. See Cal. Civ. Proc. 16 Code ' 430.10(f). 17 18 19 20 9. TM30 demurs to the purported sixth cause of action for waiting time DEMURRER TO SIXTH CAUSE OF ACTION
21 penalties on the ground that it fails to state facts sufficient to constitute a cause of action. 22 See Cal. Civ. Proc. Code ' 430.10(e). 23 10. TM30 demurs to the purported sixth cause of action for waiting time
24 penalties on the ground that it is uncertain. See Cal. Civ. Proc. Code ' 430.10(f). 25 26 27 28
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2
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 2 3 11.
DEMURRER TO SEVENTH CAUSE OF ACTION
TM30 demurs to the purported seventh cause of action for breach of
4 the implied covenant of good faith and fair dealing (employment agreement) on the ground 5 that it fails to state facts sufficient to constitute a cause of action. See Cal. Civ. Proc. Code 6 ' 430.10(e). 7 12. TM30 demurs to the purported seventh cause of action for breach of
8 the implied covenant of good faith and fair dealing (employment agreement) on the ground 9 that it is uncertain. See Cal. Civ. Proc. Code ' 430.10(f). 10 11 12 amend. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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WHEREFORE, TM30 prays that its demurrer be sustained without leave to
DATED: April 29, 2002 QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP
By Naomi J. Harlin Attorneys for Defendants T Minus 30 Films, David Suissa and Bruce Miller
3
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 2 3 4 5 6 7 II. 8 9 III. 10 11 12 IV. 13 14 15 16 17 18 19 20 21 22 23 3. 2. B. V.
TABLE OF CONTENTS Page Preliminary Statement .......................................................................................................... 1 Allegations of the First Amended Complaint ........................................................................ 2 Argument.............................................................................................................................. 5 I. OWEN ENTERTAINMENT'S SECOND CAUSE OF ACTION FOR BREACH OF THE ORAL SALE OF BUSINESS AGREEMENT IS TIME BARRED .................................................................................................................. 5 OWEN ENTERTAINMENT'S FOURTH CAUSE OF ACTION FOR ACCOUNT STATED FAILS ................................................................................... 6 OWEN'S FIFTH CAUSE OF ACTION FOR BREACH OF THE ALLEGED EMPLOYMENT AGREEMENT FAILS ................................................................. 7 A. It Cannot Be Determined From The Allegations Of The Complaint Whether The Employment Agreement Is Oral Or Written ............................. 7
OWEN'S SIXTH CAUSE OF ACTION FOR WAITING TIME PENALTIES FAILS ....................................................................................................................... 8 PLAINTIFFS' CLAIMS FOR THE BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING FAIL .............................. 9 A. Owen's Seventh Cause Of Action For Breach Of Covenant Of Good Faith And Fair Dealing Fails Because There Is No Valid Employment Agreement ...................................................................................................... 9 Plaintiffs' Claims For Breach Of Implied Covenant Of Good Faith And Fair Dealing Is Surplusage Of Their Claims For Breach Of Contract .......... 10 1. A breach of the implied covenant of good faith and fair dealing is superfluous to a breach of contract claim where the allegations are the same and identical damages are sought. .............. 10 Owen Entertainment's third cause of action for the breach of the implied covenant is superfluous to its breach of Sale of Business Agreement claims ............................................................... 11 Owen's seventh cause of action for the breach of the implied covenant is superfluous to her breach of Employment Agreement claim. .............................................................................. 12
24 Conclusion.......................................................................................................................... 13 25 26 27 28
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i
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 2 3 4
TABLE OF AUTHORITIES Page CASES Bonelli v. Conrad, 37 P.2d 137, 1 Cal. App. 2d 660 (1934) ................................................................... 6
5 Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal. App. 3d 1371, 272 Cal. Rptr. 387 (1990) ..................................... 10, 11, 12 6 Foley v. Interactive Data Corp., 7 47 Cal. 3d 654, 254 Cal. Rptr. 211 (1988) ............................................................. 13 8 Fundin v. Chicago Pneumatic Tool Co., 152 Cal. App. 3d 951, 199 Cal. Rptr. 789 (1984) ..................................................... 2 9 Guz v. Bechtel National, Inc., 24 Cal. 4th 317, 100 Cal. Rptr. 2d 352 (2000) ....................................................... 10 10 11 Horn v. Cushman & Wakefield Western, Inc., 72 Cal. App. 4th 798, 85 Cal. Rptr. 459 (1999)...................................................... 10 12 Luck v. Southern Pac. Transp. Co., 218 Cal. App. 3d 1, cert. denied, 486 U.S. 939 (1990) ............................................. 9 13 14 Truestone, Inc. v. Simi West Industrial Park II, 209 Cal. Rptr. 757, 163 Cal. App. 3d 715 (1984) ..................................................... 6 15 16 STATUTES 17 Cal. Civ. Proc. Code ' 339 .............................................................................................. 5, 6 18 Cal. Civ. Proc. Code ' 4310(g) ........................................................................................... 7 19 Cal. Lab. Code ' 201 ........................................................................................................... 8 20 Cal. Lab. Code ' 203 ....................................................................................................... 5, 8 21 OTHER AUTHORITIES
22 1 B. Witkin, Summary of California Law, "Contracts" ' 918 (9th ed. 1987) ............................................................................................. 6, 7 23 24 25 26 27 28
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ii
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 2 3 4 5
MEMORANDUM OF POINTS AND AUTHORITIES
Preliminary Statement
While all of plaintiffs Owen Entertainment Group's and Leslie Owen's
6 (collectively "plaintiffs") claims against defendants T Minus 30, David Suissa and Bruce 7 Miller (collectively "TM30") are meritless, six of the claims are not adequately pled. 8 Alleged Breach of Oral Sale of Business Agreement: Owen Entertainment
9 claims the TM30 breached an alleged sale of Business Agreement (written in the first cause 10 of action and oral in the second) by failing to pay $60,000 for the purchase of plaintiffs' 11 company. The breach of the alleged oral sale of Business Agreement is fatally defective 12 because the statue of limitations has run for plaintiffs to bring any action based on an oral 13 contract. 14 Alleged Account Stated: Owen Entertainment's claim for account stated
15 covers the same subject as allegedly covered in the written Sale of Business Agreement. 16 As a matter of law, an account stated cannot be based on the same demand involved in an 17 express contract. Thus, Owen Entertainment cannot salvage this defective claim. 18 Alleged Breach of Employment Agreement: In the fifth cause of action,
19 the individual defendant, Leslie Owen, claims that she had an one year Employment 20 Agreement. TM30 allegedly breached the agreement by laying Owen off when TM30 was 21 forced to close her department. But Owen has failed to plead whether the agreement was 22 oral or written based on a one-page memorandum prepared by Owen. If oral, the statute of 23 limitations has run. 24 Waiting Time Penalties Claim: Not only does Owen seek damages in the
25 amount of wages for the four months she did not work, Owen also asks for waiting time 26 penalties based on the unearned wages. Owen cannot seek penalties for wages she never 27 earned. 28
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1
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1
Alleged Breach of the Implied Covenant of Good Faith and Fair
2 Dealing: Plaintiffs have also brought two claims of the breach of the implied covenant of 3 good faith and fair dealing based, one on the alleged Sale of Business Agreement and the 4 other on the Employment Agreement. Because neither of plaintiffs' causes of actions for 5 the breach of the implied covenant go beyond the allegation of a mere contract breach, 6 plaintiffs have failed to state a claim. Moreover, without a valid contract claim, a breach of 7 the implied covenant must also fail. Plaintiffs cannot cure these defects, therefore, the 8 demurs should be sustained without leave to amend. 9 10 11 12 Parties. On March 19, 2002 Plaintiffs Owen Entertainment ("Owen Allegations of the First Amended Complaint1
13 Entertainment") and Leslie Owen ("Owen") (collectively "plaintiffs") filed their First 14 Amended Complaint against defendants T Minus 30 Films, David Suissa and Bruce Miller 15 (collectively, "TM30"), and TM30's former employee, defendant John Clark ("Clark"). 16 Nature of the Action. Plaintiffs have set forth seven causes of action against
17 TM30 which arise from an agreement that was allegedly negotiated between plaintiffs and 18 defendant Clark on behalf of TM30 in or about March 1999 in which TM30 allegedly 19 promised: 20 21 22 23 The Court is required to accept as true the allegations in the First Amended Complaint ("FAC") when ruling on a demurrer. See Fundin v. Chicago Pneumatic Tool 25 Co., 152 Cal. App. 3d 951, 955, 199 Cal. Rptr. 789, 792 (1984). TM30 will rely on the allegations in the FAC to demonstrate the paucity of the pleading. No representation in this 26 demurrer should be construed as an admission that any allegation in the FAC is, in fact, 27 true. 24 28
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1
(i)
to buy Owen's company, Salvo Films, for $120,000 through a progressive buy-out payment schedule based on successful booking of music videos (the alleged "Sale of Business Agreement"); and
2
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 2
(ii)
to hire Owen to operate TM30's video division for not less than one year (the alleged "Employment Agreement.")2
3 Plaintiffs claim the alleged agreements were "memorialized" in a one-page, unsigned 4 "memorandum dated April 6, 1999" prepared by Owen (the "April 6th Memorandum").3 5 The Alleged Breach of the Sale of Business Agreement and Implied
6 Covenant of Good Faith and Fair Dealing. Owen Entertainment has three causes of action 7 arising from TM30's alleged breach of the Sale of Business Agreement. In the first cause 8 of action, Owen Entertainment claims that TM30 breached the alleged written Sale of 9 Business Agreement memorialized in the April 6th Memorandum by not paying for the 10 commercials Owen booked in "August 1999"4 and "September 1999."5 Plaintiffs allege 11 TM30 paid $60,000 instead of $120,000 to buy Owen's company.6 Based on identical 12 allegations, in the second cause of action, Owen Entertainment claims that TM30 also 13 breached an oral Sale of Business Agreement.7 14 In the third cause of action, again based on the same allegations, Owen
15 Entertainment further claims that TM30 "breached the implied covenant of good faith and 16 fair dealing contained in the [Sale of Business] Agreement."8 For all three causes of 17 actions, Owen Entertainment seeks identical damages in the amount of $60,000.9 18 19 20 21 22 23 24
7 2 3 4 5 6
First Amended Complaint (the "FAC"), && 15-18. FAC, & 16 and Exhibit 1 to the FAC. FAC, & 22. FAC, & 23. FAC, && 27-31. FAC, && 32-36. FAC, & 39. FAC, && 31, 36 and 40.
25 26 27 28
8 9
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3
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1
Account Stated. Based on the same alleged terms as in the Sale of Business
2 Agreement, in the fourth cause of action for account stated, Owen Entertainment also 3 claims that TM30 "became indebted" to Owen Entertainment in an amount of $60,000 for 4 the purchase of Owen's company, Salvo Films.10 5 The Alleged Breach of the Employment Agreement and Implied Covenant of
6 Good Faith and Fair Dealing. In the fifth cause of action for breach of contract 7 (Employment Agreement), Owen claims that TM30 allegedly contracted with Owen to 8 employee her "for a period of no less than one year."11 Notwithstanding that in 9 November 1999 TM30 was forced to close the production unit in which Owen worked and 10 informed Owen that "the entire production unit . . . would be 'closed,'"12 Owen claims that 11 TM30 breached the alleged "Agreement" by laying her off and not paying her salary for the 12 entire year.13 Owen does not identify whether this "Agreement" was oral, written or both. 13 For the alleged breach, Owen seeks damages based on her unpaid wages "in an amount to 14 be proved at trial."14 15 16 17 18 19 20 21 22 23 24
12 10 11
FAC, && 41-43. FAC, & 51. FAC, & 25. FAC, & 51. FAC, & 49.
25 26 27 28
13 14
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4
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1
Owen bases her seventh cause of action for the breach of the implied
2 covenant of good faith and fair dealing on the same allegations. Specifically, as in her 3 claim for breach the Employment Agreement, in the seventh cause of action, Owen: 4 (1) alleges that TM30 breached the implied covenant in the Employment Agreement "by 5 virtue of the acts alleged above," namely laying her off and not paying salary for a period of 6 about four months;15 and (2) seeks identical damages based on unpaid wages "in an amount 7 to be proved at trial."16 8 Waiting Time Penalties. Although Owen did not work for TM30 for the four
9 months, Owen seeks waiting time penalties pursuant to Labor Code section 203 for wages 10 allegedly "due" to her for wages earned.17 11 12 13 14 I. 15 16 17 A cause of action for breach of oral contract must be filed within two years OWEN ENTERTAINMENT'S SECOND CAUSE OF ACTION FOR BREACH OF THE ORAL SALE OF BUSINESS AGREEMENT IS TIME BARRED Argument
18 of the date on which the alleged breach took place. See Cal. Civ. Proc. Code ' 339 (the 19 statue of limitations is "[w]ithin two years . . . [if the] action [is] upon a contract . . . not 20 founded upon an instrument of writing"). 21 22 23 24
15
25 26 27 28
16 17
FAC, & 58. FAC, & 59. FAC, && 54-55.
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5
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1
Here, Owen Entertainment claims that TM30 breached the oral agreement
2 when it did not pay for the music videos Owen booked in "August 1999"18 and 3 "September 1999."19 Plaintiffs did not file their complaint against TM30 until 4 November 16, 2001--over two years and one month after TM30 allegedly breached the sale 5 of Business Agreement in August and September 1999.20 Accordingly, the second cause of 6 action for breach of the oral Sale of Business Agreement is time-barred. 7 8 II. 9 10 11 In addition to its breach of Sale of Business Agreement, Owen Entertainment OWEN ENTERTAINMENT'S FOURTH CAUSE OF ACTION FOR ACCOUNT STATED FAILS
12 has set forth the same allegations as the basis to its claim for account stated. To establish 13 an account stated, Owen Entertainment would have to allege that (1) Owen Entertainment 14 presented a statement of an amount due to TM30, and (2) TM30 assented to such an 15 amount. See, e.g., Truestone, Inc. v. Simi West Industrial Park II, 209 Cal. Rptr. 757, 16 163 Cal. App. 3d 715 (1984). ("To have an account stated, it must appear that at the time 17 of the statement an indebtedness from one party to the other existed, that a balance was 18 then struck and agreed to be the correct sum . . . , and that the debtor . . . promised to pay 19 to the creditor the amount. . . ."). There are no such allegations. 20 21 22 23
20 18 19
FAC, & 22. FAC, & 23.
Plaintiffs also claim that in "October 1999, Owen and defendants booked two music videos and a spec commercial." (FAC, & 24). Nowhere in the FAC is there any 25 allegation that TM30 owes Owen Entertainment for these bookings. However, even if the alleged oral breach of the Sale of Business Agreement is somehow based on the 26 October 1999 bookings, the two year statute of limitations to bring this claim has also run. 27 See Cal. Civ. Proc. Code ' 339. 24 28
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6
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1
Furthermore, it is an "established rule" that an account stated cannot be based
2 on the same demand involved in an express contract. See Bonelli v. Conrad, 37 P.2d 137, 3 141, 1 Cal. App. 2d 660, 668 (1934). An account stated cannot serve as the basis of 4 recovery on a written contract, but rather serves as a new contract foreclosing any dispute 5 as to the amount owed. 1 B. Witkin, Summary of California Law, "Contracts," ' 918, 6 at 820-21 (9th ed. 1987). ("An account stated cannot supersede . . . a written contract . . . 7 for the written instrument involves no uncertainty in the sum due, and is higher evidence of 8 the debt.") 9 Here, other than the alleged Sale of Business Agreement, there is no basis for
10 an account stated. Because Owen Entertainment has alleged the existence of a written Sale 11 of Business Agreement, Owen Entertainment is not entitled to bring a separate claim on the 12 same amount under an "account stated" theory. An account stated serves in place of a 13 written contract, not in addition to a written contract. See id. 14 Because Owen Entertainment is not entitled to bring this separate cause of
15 action based solely on the Sale of Business Agreement, TM30's demurrer to the fourth 16 cause of action should be sustained without leave to amend 17 18 III. 19 20 21 22 23 24 A demurrer should be sustained to a cause of action for breach of contract A. It Cannot Be Determined From The Allegations Of The Complaint Whether The Employment Agreement Is Oral Or Written OWEN'S FIFTH CAUSE OF ACTION FOR BREACH OF THE ALLEGED EMPLOYMENT AGREEMENT FAILS
25 when it cannot be ascertained from the pleading whether the contract sued on is written, 26 oral or implied by conduct. See Cal. Civ. Proc. Code ' 430.10(g). Such is the case here. 27 28
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7
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1
Plaintiffs allege that "[i]n or about March 1999, plaintiffs and defendants
2 entered into an agreement (the 'Agreement'), which was memorialized in a memorandum 3 dated April 6, 1999."21 On the face of the claim, it is unclear whether Plaintiffs are 4 claiming that the Employment Agreement (1) is an oral agreement entered into on 5 March 1999, (2) is written agreement entered into on April 6, 1999, or (3) is a partly oral, 6 partly written agreement. 7 To compound the confusion, Plaintiffs specifically pled two separate causes
8 of action for the breach of the Sale of Business Agreement--one based on a written contract 9 and the other based on an oral contract. The Sale of Business Agreement, like the 10 Employment Agreement, arises from the same allegations--that the parties came to some 11 kind of agreement in "March 1999" which was "memorialized" in the April 6th 12 Memorandum. It is unclear why Plaintiffs identify an oral and written Sale of Business 13 Agreement (except maybe to salvage the claim from the statute of limitations running), but 14 do not identify the nature of the Employment Agreement. 15 Owen has not adequately set forth whether the so-called Employment
16 Agreement is written or oral. Accordingly, TM30's demurrer to Owen's breach of 17 Employment Agreement should be sustained. 18 19 20 21 22 Waiting time penalties are incurred only when earned wages are not paid. IV. OWEN'S SIXTH CAUSE OF ACTION FOR WAITING TIME PENALTIES FAILS
23 The penalties have no application when the employee never worked. Yet, in the sixth cause 24 of action, Owen seeks penalties for unearned wages. 25 26 27 28
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21
FAC, & 16.
8
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1
Pursuant to Labor Code section 203, waiting time penalties arise: "If an
2 employer willfully fails to pay . . . in accordance with Sections 201 . . . any wages of an 3 employee who is discharged or who quits, the wages of the employee shall continue as a 4 penalty from the due date thereof at the same rate until paid or until an action therefore is 5 commenced. . . ." Section 201 provides, in part: "If an employer discharges an employee, 6 the wages earned and unpaid at the time of discharge are due and payable immediately." 7 (emphasis added). 8 9 In this case, Owen alleges that she was discharged on November 29, 1999.22 Nevertheless, in the sixth cause of action, Owen seeks waiting time penalties for the period
10 after her employment ended: TM30 "failed and refused to pay Owen the sum of $1364.61 11 as her wages each week from November 27, 1999 through April 4, 2000."23 12 There is a distinction between "earned wages" and damages measured by the
13 amount of wages that were never earned. The former are subject to waiting time penalties. 14 Under the Labor Code, the employee who puts in the time has to be paid, and if the
15 payment is delayed, penalties are incurred. 16 Contract damages for lost wages are, by definition, the antipathy of earned
17 wages. The Labor Code has no application because no labor was performed. The amount 18 unearned, even if recoverable as contract damages, is not subject to penalties for delay. 19 Indeed, given an employee's duty to mitigate, even if an employment contract were 20 breached, the "lost wages" must be reduced--and may even be eliminated--by an employee's 21 finding other employment. 22 23 V. 24 25 26 27 28
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22 23
PLAINTIFFS' CLAIMS FOR THE BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING FAIL FAC, & 55. FAC, & 55
9
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 2 3 4 5 Owen's seventh cause of action for breach of the covenant of good faith and A. Owen's Seventh Cause Of Action For Breach Of Covenant Of Good Faith And Fair Dealing Fails Because There Is No Valid Employment Agreement
6 fair dealing must fail because, as discussed above, there is no valid underlying Employment 7 Agreement. "An alleged breach of the implied covenant of good faith and fair dealing is an 8 allegation of breach of contract and arises out of the contract itself." Luck v. Southern Pac. 9 Transp. Co., 218 Cal. App. 3d 1, 12; cert. denied 486 U.S. 939 (1990). "Where there is no 10 underlying contract there can be no duty of good faith arising from the implied covenant." 11 Horn v. Cushman & Wakefield Western, Inc., 72 Cal. App. 4th 798, 819, 85 Cal. 12 Rptr. 459, 469 (1999). 13 Therefore, TM30's demurrer to Owen's seventh cause of action for breach of
14 implied covenant of good faith and fair dealing of the Employment Agreement should be 15 sustained without leave to amend. 16 17 18 19 20 21 22 23 24 Where plaintiff has alleged a breach of a specific, consensual term of a 1. A breach of the implied covenant of good faith and fair dealing is superfluous to a breach of contract claim where the allegations are the same and identical damages are sought. B. Plaintiffs' Claims For Breach Of Implied Covenant Of Good Faith And Fair Dealing Is Surplusage Of Their Claims For Breach Of Contract
25 contract, the additional claim of breach of the implied covenant of good faith and fair 26 dealing is superfluous. In Guz v. Bechtel National, Inc., 24 Cal. 4th 317, 327, 100 Cal. 27 Rptr. 2d 352 (2000) the Supreme Court upheld a motion for summary judgment of a breach 28
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TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 of the implied covenant because "[w]here a breach of an actual terms is alleged, a separate 2 implied covenant claim, based on the same breach is superfluous." Based on the same 3 principle, in Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal. App. 3d 1371, 4 1395, 272 Cal. Rptr. 387, 400 (1990), the court sustained a demurrer to a claim for the 5 implied covenant without leave to amend because the plaintiffs had "alleged nothing more 6 than a duplicative claim for contract damages." Id. at 1401. The court explained: 7 8 9 10 11 12 Id. at 1395. 13 As the Careau court noted, a separate cause of action based on a breach of If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.
14 the implied covenant of good faith and fair dealing is viable only in those cases where there 15 is no claim for breach of a consensual contract term or where the purpose of the implied 16 covenant claim is to obtain a tort recovery. See id. 17 18 19 20 21 22 23 24 25 26 27 28
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11
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 2 3 4 5
2.
Owen Entertainment's third cause of action for the breach of the implied covenant is superfluous to its breach of Sale of Business Agreement claims.
Here, in the first and second causes of action, Owen Entertainment claims
6 that TM30 breached the alleged Sale of Business Agreement by "failing and refusing to pay 7 Owen Entertainment . . . $60,000."24 In the third cause of action, based on the same 8 allegations, Owen Entertainment claims that TM30 breached the Sale of Business 9 Agreement in violation of the implied covenant of good faith and fair dealing and asks for 10 identical damages in the amount of "$60,000."25 The third claim adds nothing that is not 11 covered by the first and second claims for breach of the alleged Sale of Business 12 Agreement. 13 Owen Entertainment has alleged a breach of a specific, consensual term of a
14 contract--that TM30 owed it $60,000. The additional cause of action of breach of the 15 implied covenant of good faith and fair dealing--i.e., breach of the same promises resulting 16 in the same damages--is duplicative and superfluous. Thus, Owen Entertainment's third 17 cause of action should be disregarded because it has not stated an additional claim. 18 19 20 21 22 23 24 25 26 27 28
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24 25
3.
Owen's seventh cause of action for the breach of the implied covenant is superfluous to her breach of Employment Agreement claim.
FAC, && 29 and 34. FAC, && 38 and 40.
12
TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1
Likewise, Owen's seventh cause of action for breach of the implied covenant
2 is duplicative of her fifth cause of action for breach of the alleged Employment Agreement. 3 In the breach of Employment Agreement claim, Owen alleges that TM30 breached the
4 contract by laying her off and refusing to pay "the full amount of her salary and benefits 5 pursuant to the Agreement."26 Owen seeks damages based on the alleged unpaid wages "in 6 an amount to be proved at trial."27 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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26 27
FAC, & 47. FAC, & 49.
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TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1
Arising from the same alleged conduct,28 Owen claims that TM30 breached
2 the implied covenant of good faith and fair dealing contained in the Employment Agreement 3 and seeks identical damages based on the alleged unpaid wages "in an amount to be proved 4 at trial."29 Because Owen relies on the same alleged acts and seeks the same damages 5 already sought in her companion breach of Employment Agreement claim, her fifth cause 6 of action for breach of the implied covenant "may be disregarded as superfluous as no 7 additional claim is actually stated."30 See Careau, 222 Cal. App. 3d at 1395. Therefore, 8 TM30's demurrer to Owen's fifth cause of action for breach of implied covenant of good 9 faith and fair dealing should be sustained without leave to amend. 10 11 12 13 14 15 16 17 18 Owen bases her claim for breach of the implied covenant "by virtue of the acts alleged above," namely, "refus[ing] to pay Owen the full amount of her salary and benefits 20 pursuant to the Agreement." FAC, && 47 and 58. 19 21 22
29 30 28
FAC, & 59.
It does not matter that Owen claims the alleged Employment Agreement is an 23 employment contract because there is no special relationship between an employer and 24 employee to give rise to tort damages for a claim of the breach of the implied covenant of good faith and fair dealing. In the employee termination area, there is no tortious breach of 25 the implied covenant. See Foley v. Interactive Data Corp., 47 Cal. 3d 654, 692, 254 Cal. Rptr. 211 (1988) (the court held that it was "not convinced that a 'special relationship' . . . 26 existed in the usual employment relationship so as to justify recognition of a tort remedy for 27 a breach of the implied covenant.") 28
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TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT
1 2 3
Conclusion
For all the foregoing reasons, TM30 respectfully requests that the Court
4 sustain these demurrers in their entirety, without leave to amend. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
02839/03A57808-A264-4106-AA8C-CBA67174B4A0.DOC
DATED: April 29, 2002 QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP
By Naomi J. Harlin Attorneys for Defendants T Minus 30 Films, David Suissa and Bruce Miller
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TM30 DEFENDANTS DEMURRER TO FIRST AMENDED COMPLAINT