CONTRACT-Practice Brief-Locke V Warner Bros Inc-Breach, Implied Covenant of Good Faith and Fair Dealing

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KeyCite Yellow Flag - Negative Treatment
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Declined to Extend by
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Glenn K. Jackson Inc. v. Roe
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,
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9th Cir.(Cal.),
}
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December 11, 2001
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57 Cal.App.4th 354
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Court
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of
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Appeal
}
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}
,
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Second
}
}
}
}
District
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}
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, Division 3, California.
\par
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Sondra
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LOCKE
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}
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et al., Plaintiffs and Appellants,
\par
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}
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v.
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WARNER
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BROS
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. INC., Defendant and Respondent.
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No. B092824.
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|
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Aug. 26,
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1997
}
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.
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|
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Rehearing Denied Sept. 24,
}
1997
}
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.
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|
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Review Denied Nov. 19,
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1997
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.
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*** Start Section
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...
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Prospective director brought action against film studio for sex discrimination,
breach of implied covenant of good faith and fair dealing, breach of contract, and
fraud. The Superior Court, Los Angeles County, No. EC014425, Thomas C. Murphy, J.,
granted summary judgment to studio. Prospective director appealed. The
}
Court
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of
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Appeal
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,
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Klein
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, P.J., held that: (1) fact questions precluded summary judgment on breach of
contract claim, and (2) fact questions precluded summary judgment on fraud claim.
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Affirmed in part and reversed in part.
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General Rules of Construction
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Where contract confers on one party a discretionary power affecting rights of the
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In every contract there is an implied covenant that neither party shall do anything
which will have effect of destroying or injuring right of other party to receive
fruits of contract.
\par
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30
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{\f2 \b0 \fs18 \cf1 \i0
Appeal and Error
\par
}
}
}
{\li39 \f2 \b0 \ql \ri39 \fs18 \cf1 \i0
{\f2 \b0 \fs18 \cf1 \i0
"http://www.westlaw.com/Browse/Home/KeyNumber/30XII/View.html?
30XII
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{\f2 \b0 \fs18 \cf1 \i0
Briefs
\par
}
}
}
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30k762
}
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Reply briefs
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Plaintiff waived any error in trial court\rquote s ruling with respect to her
causes of action alleging gender bias, where her opening appellate brief did not
assert any error in trial court\rquote s disposition of those causes of action.
\par
}
}
}
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[9]
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Appeal and Error
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89504e470d0a1a0a0000000d494844520000001c0000001008020000008aad88b800000019744558745
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Reply briefs
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30
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Appeal and Error
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}
}
}
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"http://www.westlaw.com/Browse/Home/KeyNumber/30XII/View.html?
30XII
}
{\f2 \b0 \fs18 \cf1 \i0
Briefs
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30k762
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Reply briefs
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Ordinarily, appellants\rquote failure to raise issue in their opening brief waives
issue on appeal.
\par
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}
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co_headnoteId_19971781120092013112409114}
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Attorneys and Law Firms
\par
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**921
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*357
}
}
}
Peggy Garrity
}}}
, Santa Monica, for Plaintiffs and Appellants.
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
O\rquote Melveny & Myers,
}
M. Randall Oppenheimer
}}}
\sb260
,
}
Robert M. Schwartz
}}}
\sb260
, Los Angeles and
}
Nancy E. Sussman
}}}
\sb260
, San Diego, for Defendant and Respondent.
\par
}
}
}
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Opinion
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KLEIN
}}}
\sa260
\sb260
, Presiding Justice.
\par
}
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Plaintiffs and appellants Sondra
}
Locke
}
}
}
(
}
Locke
}
}
}
) and Caritas Films, a California corporation
}
{\f2 \b1 \fs26 \cf1 \i0
**922
}
}
(Caritas) (sometimes collectively referred to as
}
Locke
}
}
}
) appeal a judgment following a grant of summary judgment in favor of defendant and
respondent
}
Warner
}
}
}
}
Bros
}
}
}
. (
}
Warner
}
}
}
).
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
The essential issue presented is whether triable issues of material fact are
present which would preclude summary judgment.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
We conclude triable issues are present with respect to whether
}
Warner
}
}
}
breached its development deal with
}
Locke
}
}
}
by categorically refusing to work with her, and whether
}
Warner
}
}
}
fraudulently entered into said agreement without the intention to work with
}
Locke
}
}
}
. The judgment therefore is reversed as to the second and fourth causes of action
and otherwise is affirmed.
\par
}
}
}
\u160\'3f
\par
}
}
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{\*\bkmkstart co_anchor_Ia828508f552d11e38578f7ccc38dc}{\*\bkmkend
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\par
{\li0 \f2 \b0 \ri0 \fs26 \cf1 \qc \i0
{\f2 \b0 \fs26 \cf1 \i1
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FACTUAL AND PROCEDURAL BACKGROUND
\par
}
}
}
}
{\li260 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
1.
}
{\f2 \b0 \fs26 \cf1 \i1
Locke\rquote s
}
}
}
dispute with Eastwood.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
In 1975,
}
Locke
}
}
}
came to
}
Warner
}
}
}
to appear with Clint Eastwood in
}
{\f2 \b0 \fs26 \cf1 \i1
The Outlaw Josey Wales.
}
}
During the filming of the movie,
}
Locke
}
}
}
and Eastwood began a personal and romantic relationship. For
}
{\f2 \b1 \fs26 \cf1 \i0
*358
}
}
the next dozen years, they lived in Eastwood\rquote s Los Angeles and Northern
California homes.
}
Locke
}
}
}
also appeared in a number of Eastwood\rquote s films. In 1986,
}
Locke
}
}
}
made her directorial debut in
}
{\f2 \b0 \fs26 \cf1 \i1
Ratboy.
\par
}
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
In 1988, the relationship deteriorated, and in 1989 Eastwood terminated it.
}
Locke
}
}
}
then brought suit against Eastwood, alleging numerous causes of action. That
action was resolved by a November 21, 1990 settlement agreement and mutual general
release. Under said agreement, Eastwood agreed to pay
}
Locke
}
}
}
additional compensation in the sum of $450,000 \u8220\'3fon account of past
employment and
}
Locke\rquote s
}
}
}
contentions\u8221\'3f and to convey certain real property to her.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\*\bkmkstart co_anchor_Ia8285090552d11e38578f7ccc38dc}{\*\bkmkend
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\par
{\li260 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
2.
}
{\f2 \b0 \fs26 \cf1 \i1
Locke\rquote s
}
}
}
development deal with
}
Warner
}
}
}
.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
According to
}
Locke
}
}
}
, Eastwood secured a development deal for
}
Locke
}
}
}
with
}
Warner
}
}
}
in exchange for
}
Locke\rquote s
}
}
}
dropping her case against him. Contemporaneously with the
}
Locke
}
}
}
/Eastwood settlement agreement,
}
Locke
}
}
}
entered into a written agreement with
}
Warner
}
}
}
, dated November 27, 1990. It is the
}
Locke
}
}
}
/
}
Warner
}
}
}
agreement which is the subject of the instant controversy.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
The
}
Locke
}
}
}
/
}
Warner
}
}
}
agreement had two basic components. The first element states
}
Locke
}
}
}
would receive $250,000 per year for three years for a \u8220\'3fnon-exclusive
first look deal.\u8221\'3f It required
}
Locke
}
}
}
to submit to
}
Warner
}
}
}
any picture she was interested in developing before submitting it to any other
studio.
}
Warner
}
}
}
then had 30 days either to approve or reject a submission.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
The second element of the contract was a $750,000 \u8220\'3fpay or play\u8221\'3f
directing deal. The provision is called \u8220\'3fpay or play\u8221\'3f because it
gives the studio a choice: it can either \u8220\'3fplay\u8221\'3f the director by
using the director\rquote s services, or pay the director his or her fee.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Unbeknownst to
}
Locke
}
}
}
at the time, Eastwood had agreed to reimburse
}
Warner
}
}
}
for the cost of her contract if she did not succeed in getting projects produced
and developed. Early in the second year of the three-year contract,
}
Warner
}
}
}
charged $975,000 to an Eastwood film, \u8220\'3fUnforgiven.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Warner
}
}
}
paid
}
Locke
}
}
}
the guaranteed compensation of $1.5 million under the agreement. In accordance
with the agreement,
}
Warner
}
}
}
also provided
}
Locke
}
}
}
with an office on the studio lot and an administrative assistant. However,
}
Warner
}
}
}
did not develop any of
}
Locke\rquote s
}
}
}
proposed projects or hire her to direct any films.
}
Locke
}
}
}
contends the development deal was a sham, that
}
Warner
}
}
}
never intended to make any films with her, and that
}
Warner\rquote s
}
}
}
sole
}
{\f2 \b1 \fs26 \cf1 \i0
*359
}
}
motivation in entering into the agreement was to assist Eastwood in settling his
litigation with
}
Locke
}
}
}
.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
\par
{\li260 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
3.
}
{\f2 \b0 \fs26 \cf1 \i1
Locke\rquote s
}
}
}
action against
}
Warner
}
}
}
.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
On March 10, 1994,
}
Locke
}
}
}
filed suit against
}
Warner
}
}
}
, alleging four causes of action.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
The first cause of action alleged sex discrimination in violation of public policy.
}
Locke
}
}
}
alleged
}
Warner
}
}
}
denied her the benefit of the bargain of the development deal on account of her
gender.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
The third cause of action, captioned \u8220\'3fTortious Breach of the Implied
Covenant of Good Faith and Fair Dealing in Violation of
}
{\f2 \b1 \fs26 \cf1 \i0
**923
}
}
Public Policy,\u8221\'3f alleged a similar claim.
}
Locke
}
}
}
pled that in denying her the benefits of the
}
Warner
}
}
}
/
}
Locke
}
}
}
agreement,
}
Warner
}
}
}
was \u8220\'3fmotivated by [its] discriminatory bias against women in violation of
... public policy.\u8221\'3f
}
{\f2 \b0 \fs20 \cf1 \i0
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\par
}
}
}
\u160\'3f
\par
}
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{\li0 \ri0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
We construe both the first and third causes of action as purporting to allege a
claim for tortious wrongful discharge in violation of the public policy against sex
discrimination.
}
findType=Y&serNum=1989004398&pubNum=661&originatingDoc=I3ea40293fab911d9bf60c1d57eb
c853e&refType=RP&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=Docum
entItem&contextData=(sc.Search)" }{\fldrslt
(
}
{\f2 \b0 \fs18 \cf5 \i1
Foley v. Interactive Data Corp.
}
}
(1988) 47 Cal.3d 654, 665\u8211\'3f671, 254 Cal.Rptr. 211, 765 P.2d 373;
}
{\f2 \b0 \fs18 \cf5 \i1
Rojo v. Kliger
}
}
(1990) 52 Cal.3d 65, 88\u8211\'3f91, 276 Cal.Rptr. 130, 801 P.2d 373.)
\par
}
}
}
}\f2 \li0 \strike0 \ul0 \b0 \qj \sa0 \sb0 \fs18 \ri0 \cf1 \i0 \intbl \cell \row }
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
The second cause of action alleged that
}
Warner
}
}
}
breached the contract by refusing to consider
}
Locke\rquote s
}
}
}
proposed projects and thereby deprived her of the benefit of the bargain of the
}
Warner
}
}
}
/
}
Locke
}
}
}
agreement.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Lastly, the fourth cause of action alleged fraud.
}
Locke
}
}
}
pled that at the time
}
Warner
}
}
}
entered into the agreement with her, it concealed and failed to disclose it had no
intention of honoring the agreement.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Warner
}
}
}
answered, denied each and every allegation and asserted various affirmative
defenses.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
\par
{\li260 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
4.
}
{\f2 \b0 \fs26 \cf1 \i1
Warner\rquote s
}
}
}
motion for summary judgment and opposition thereto.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
On January 6, 1995,
}
Warner
}
}
}
filed a motion for summary judgment.
}
Warner
}
}
}
contended it did not breach its contract with
}
Locke
}
}
}
because it did consider all the projects she presented, and the studio\rquote s
decision not to put any of those projects into active development or
\u8220\'3fhand\u8221\'3f
}
Locke
}
}
}
a script which it already owned was not a breach of any express or implied
contractual duty.
}
Warner
}
}
}
asserted the odds are slim a producer can get a project into development and even
slimmer a director will be hired to direct a film. During the term of
}
Locke\rquote s
}
}
}
deal,
}
Warner
}
}
}
had similar deals with numerous other producers and directors, who fared no better
than
}
Locke
}
}
}
.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
}
{\f2 \b1 \fs26 \cf1 \i0
*360
}
}
As for
}
Locke\rquote s
}
}
}
sex discrimination claims,
}
Warner
}
}
}
averred there was no evidence it ignored
}
Locke\rquote s
}
}
}
projects or otherwise discriminated against her on account of her gender. Finally,
}
Warner
}
}
}
urged the fraud claim was meritless because
}
Locke
}
}
}
had no evidence that when
}
Warner
}
}
}
signed the contract, it did not intend to honor the deal, and moreover,
}
Warner
}
}
}
had fulfilled its contractual obligations to
}
Locke
}
}
}
.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
In opposing summary judgment,
}
Locke
}
}
}
contended
}
Warner
}
}
}
breached the agreement in that it had no intention of accepting any project
regardless of its merits.
}
Locke
}
}
}
also asserted
}
Warner
}
}
}
committed fraud by entering into the agreement without any intention of approving
any project with
}
Locke
}
}
}
or allowing
}
Locke
}
}
}
to direct another film.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Locke\rquote s
}
}
}
opposition papers cited the deposition testimony of Joseph Terry, who recounted a
conversation he had with Bob Brassel, a
}
Warner
}
}
}
executive, regarding
}
Locke\rquote s
}
}
}
projects. Terry had stated to Brassel: \u8220\'3f \u8216\'3fWell, Bob, this woman
has a deal on the lot. She\rquote s a director that you want to work with. You have
a deal with her.... I\rquote ve got five here that she\rquote s interested
in.\u8217\'3f [\u182\'3f] And then I would get nothing. [\u182\'3f] ... [\u182\'3f]
I was told [by Brassel], \u8216\'3fJoe, we\rquote re not going to work with
her,\u8217\'3f and then, \u8216\'3fThat\rquote s Clint\rquote s deal.\u8217\'3f And
that\rquote s something I just completely did not understand.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Similarly, the declaration of Mary Wellnitz stated: She worked with
}
Locke
}
}
}
to set up projects at
}
Warner
}
}
}
, without success. Shortly after she began her association with
}
Locke
}
}
}
, Wellnitz submitted a script to Lance Young, who at the time was a senior vice
president of production at
}
Warner
}
}
}
. After discussing the script, Young told Wellnitz, \u8220\'3fMary, I want you to
know that I think Sondra is a wonderful woman and very talented, but, if you think
I can go down the hall and tell Bob Daly that I have a movie I want to make with
her he would tell me to forget it. They are not going to make a movie with her
here.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
\par
{\li260 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
5.
}
{\f2 \b0 \fs26 \cf1 \i1
Trial court\rquote s ruling.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
On February 17, 1995, the trial court granted summary judgment in favor of
}
Warner
}
}
}
. Thereafter, the trial court signed an extensive order granting summary judgment.
The order stated:
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
\u8220\'3fUnder the contract,
}
Warner
}
}
}
had no obligation either to put into development any of the projects submitted to
the studio for its consideration, or to \u8216\'3fhand off\u8217\'3f to
}
Locke
}
}
}
any
}
{\f2 \b1 \fs26 \cf1 \i0
**924
}
}
scripts for her to direct that it previously had acquired from someone else. The
implied covenant of good faith and fair dealing cannot be imposed to create a
contract different from the one the
}
{\f2 \b1 \fs26 \cf1 \i0
*361
}
}
parties negotiated for themselves.
}
Warner
}
}
}
had the option to pass on each project
}
Locke
}
}
}
submitted.
}
Warner
}
}
}
was not required to have a good faith or \u8216\'3ffair\u8217\'3f basis for
declining to exercise its right to develop her material. Such a requirement would
be improper and unworkable. A judge or jury cannot and should not substitute its
judgment for a film studio\rquote s when the studio is making the creative decision
of whether to develop or produce a proposed motion picture. Such highly subjective
artistic and business decisions are not proper subjects for judicial review.
Moreover,
}
Warner
}
}
}
had legitimate commercial and artistic reasons for declining to develop the
projects
}
Locke
}
}
}
submitted.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
With respect to
}
Locke\rquote s
}
}
}
claim she was defrauded by
}
Warner
}
}
}
when it entered into the agreement with the undisclosed intention not to honor its
contractual obligations, the trial court ruled that because
}
Warner
}
}
}
did not breach its contractual obligations to
}
Locke
}
}
}
, the fraud claim was meritless. Also, it could not be inferred from the statements
by Young and Brassel that two years earlier, when
}
Warner
}
}
}
entered into agreement, it had no intention of working with
}
Locke
}
}
}
.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
As for the two causes of action alleging sex discrimination, the trial court found
no evidence
}
Warner
}
}
}
declined to develop the projects
}
Locke
}
}
}
submitted, and declined to use her directing services, on account of her gender.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Locke
}
}
}
filed a timely notice of appeal from the judgment.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
\par
{\li0 \f2 \b0 \ri0 \fs26 \cf1 \qc \i0
{\f2 \b0 \fs26 \cf1 \i1
{\f2 \b0 \fs26 \cf1 \i1
CONTENTIONS
\par
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Locke
}
}
}
contends: the trial court erred by granting
}
Warner\rquote s
}
}
}
motion for summary judgment based on its conclusion there were no disputed issues
of material fact; the trial court erred in weighing the evidence, resolving doubts
against
}
Locke
}
}
}
, the non-moving party, and adopting only those inferences favorable to
}
Warner
}
}
}
where the evidence supported contrary inferences; and the trial court committed
reversible error first by failing to make any findings or evidentiary rulings and
then by adopting
}
Warner\rquote s
}
}
}
defective ruling.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
\par
{\li0 \f2 \b0 \ri0 \fs26 \cf1 \qc \i0
{\f2 \b0 \fs26 \cf1 \i1
{\f2 \b0 \fs26 \cf1 \i1
DISCUSSION
\par
}
}
}
}
{\li260 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
1.
}
{\f2 \b0 \fs26 \cf1 \i1
Standard of appellate review.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
As we recently stated in
}
findType=Y&serNum=1996117380&pubNum=3484&originatingDoc=I3ea40293fab911d9bf60c1d57e
bc853e&refType=RP&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=Docu
{\f2 \b0 \fs26 \cf5 \i1
PMC, Inc. v. Saban Entertainment, Inc.
}
}
(1996) 45
}
Cal.App
}
}
}
.
}
4th
}
}
}
579, 590, 52
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
877,
}}}
summary judgment \u8220\'3fmotions are to expedite litigation and eliminate
needless trials. [Citation.]
}
{\f2 \b1 \fs26 \cf1 \i0
*362
}
}
They are granted \u8216\'3fif all the papers submitted show that there is no
triable issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.\u8217\'3f [Citations.]\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
A defendant meets its burden upon such a motion if it negates an essential element
of the plaintiff\rquote s cause of action, or establishes a complete defense, or if
it demonstrates the absence of evidence to support the plaintiff\rquote s case.
Once the moving defendant has met its initial burden, the burden shifts to the
plaintiff to show that a triable issue of one or more material facts exists.
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
PMC, Inc., supra,
}
}
45
}
Cal.App
}
}
}
.
}
4th
}
}
}
at p. 590, 52
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
877;
}}}
{\f2 \b0 \fs26 \cf1 \i1
}
}
{\f2 \b0 \fs26 \cf5 \i1
Leslie G. v. Perry & Associates
}
}
(1996) 43
}
Cal.App
}
}
}
.
}
4th
}
}
}
472, 482, 50
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
785.)
}}}
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
On appeal, \u8220\'3fwe exercise \u8216\'3fan independent assessment of the
correctness of the trial court\rquote s ruling, applying the same legal standard as
the trial court....\u8217\'3f [Citations.] \u8216\'3f[W]e construe the moving
party\rquote s affidavits strictly, construe the opponent\rquote s affidavits
liberally, and resolve doubts about the propriety of granting the motion in favor
of the party opposing it.\u8217\'3f [Citations.]\u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
PMC, Inc., supra,
}
}
45
}
Cal.App
}
}
}
.
}
4th
}
}
}
at p. 590, 52
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
877.)
}}}
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Our review is guided by the foregoing principles.
}
{\f2 \b0 \fs20 \cf1 \i0
2
}}}
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0 {
\cellx4100
\intbl
{\li0 \ri0
{\li0 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
{\f2 \b0 \fs26 \cf1 \i0
co_footnote_B00221997178112_1}
{\fldrslt
2
\par
}
}
{\li0 \ri0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
Warner
}
}
}
interposed extensive evidentiary objections, including objections to portions of
Wellnitz\rquote s declaration and Terry\rquote s deposition testimony. However, we
specifically note the absence of any objection by
}
Warner
}
}
}
to Terry\rquote s statement, \u8220\'3fI was told, \u8216\'3fJoe, we\rquote re not
going to work with her,\u8217\'3f and then, \u8216\'3fThat\rquote s Clint\rquote s
deal.\u8217\'3f \u8221\'3f Also, the only objection below to Wellnitz\rquote s
assertion that Young told her \u8220\'3fif you think I can go down the hall and
tell Bob Daly that I have a movie I want to make with her he would tell me to
forget it. They are not going to make a movie with her here,\u8221\'3f is that
Young\rquote s statement was irrelevant. The trial court disposed of all the
objections by ruling: \u8220\'3fTo the extent the parties\rquote evidentiary
objections are pertinent to the Court\rquote s decision on the motion for summary
judgment, the defendant\rquote s evidentiary objections are sustained and the
plaintiffs\rquote objections are overruled.\u8221\'3f This sweeping ruling was
erroneous because, inter alia, the relevancy objection was meritless and should
have been overruled. Therefore, the subject statements are properly before this
court.
\par
}
}
}
}
}\f2 \ul0 \qj \b0 \chcbpat2 \ri0 \i0 \li0 \strike0 \sa0 \sb0 \fs18 \cf1 \intbl
\cell \row }
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
\par
{\li260 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
}
{\f2 \b1 \fs26 \cf1 \i0
**925
}
}
2.
}
{\f2 \b0 \fs26 \cf1 \i1
A triable issue exists as to whether
}
Warner
}
}
}
breached its contract with
}
Locke
}
}
}
by failing to evaluate
}
Locke\rquote s
}
}
}
proposals on their merits.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
As indicated, the second cause of action alleged
}
Warner
}
}
}
breached the contract by \u8220\'3frefusing to consider the projects prepared by [
}
Locke
}
}
}
] and
}
{\f2 \b1 \fs26 \cf1 \i0
*363
}
}
depriving [
}
Locke
}
}
}
] of the benefit of the bargain of the
}
Warner
}
}
}
\u8211\'3f
}
Locke
}
}
}
agreement.\u8221\'3f
}
{\f2 \b0 \fs20 \cf1 \i0
3
}}}
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0 {
\cellx4100
\intbl
{\li0 \ri0
{\li0 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
{\f2 \b0 \fs26 \cf1 \i0
co_footnote_B00331997178112_1}
{\fldrslt
3
\par
}
}
{\li0 \ri0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
Contrary to
}
Warner\rquote s
}
}
}
contention
}
Locke
}
}
}
is raising an unpled claim for breach of the implied covenant of good faith and
fair dealing, the second cause of action for breach of contract adequately alleges
}
Warner
}
}
}
deprived
}
Locke
}
}
}
of the benefit of the bargain of the development deal by refusing to consider her
projects. Such conduct by
}
Warner
}
}
}
, if proven, would amount to a breach of the covenant, implied \u8220\'3fin every
contract that neither party will do anything which will injure the right of the
other to receive the benefits of the agreement. [Citation.]\u8221\'3f
}
(
}
{\f2 \b0 \fs18 \cf5 \i1
Comunale v. Traders & General Ins. Co.
}
}
(1958) 50 Cal.2d 654, 658, 328 P.2d 198;
accord
}
{\f2 \b0 \fs18 \cf5 \i1
Waller v. Truck Ins. Exchange, Inc.
}
}
(1995) 11 Cal.4th 1, 36, 44
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
370, 900 P.2d 619.)
}\f2 \strike0 \ul1 \b0 \chcbpat2 \sa0 \sb0 \fs18 \cf5 \i0 }}
\par
}
}
}
\cell \row }
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
In granting summary judgment on this claim, the trial court ruled \u8220\'3f[a]
judge or jury cannot and should not substitute its own judgment for a film
studio\rquote s when the studio is making the creative decision of whether to
develop or produce a proposed motion picture. Such highly-subjective artistic and
business decisions are not proper subjects for judicial review.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
The trial court\rquote s ruling missed the mark by failing to distinguish between
}
Warner\rquote s
}
}
}
right to make a subjective creative decision, which is not reviewable for
reasonableness, and the requirement the dissatisfaction be bona fide or genuine.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
\par
{\li0 \f2 \b0 \ri0 \fs26 \cf1 \qc \i0
a.
}
{\f2 \b0 \fs26 \cf1 \i1
General principles.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\field {\*\fldinst HYPERLINK "#co_anchor_F11997178112_1" }{\fldrslt
[1]
}}}
{\f2 \b0 \fs26 \cf5 \i0
{\*\bkmkstart co_anchor_B11997178112_1}{\*\bkmkend co_anchor_B11997178112_1}
}
}
[2]
}}}
{\f2 \b0 \fs26 \cf5 \i0
}
\u8220\'3f \u8216\'3f[W]here a contract confers on one party a discretionary power
affecting the rights of the other, a duty is imposed to exercise that discretion in
good faith and in accordance with fair dealing.\u8217\'3f [Citations.]\u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Perdue v. Crocker National Bank
}
}
(1985) 38 Cal.3d 913, 923, 216 Cal.Rptr. 345, 702 P.2d 503;
}}}
accord
}
{\f2 \b0 \fs26 \cf5 \i1
Kendall v. Ernest Pestana, Inc.
}
}
(1985) 40 Cal.3d 488, 500, 220 Cal.Rptr. 818, 709 P.2d 837.)
}}}
It is settled that in \u8220\'3f \u8216\'3fevery contract there is an implied
covenant that neither party shall do anything which will have the effect of
destroying or injuring the right of the other party to receive the fruits of the
contract....\u8217\'3f \u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Kendall, supra,
}
}
at p. 500, 220 Cal.Rptr. 818, 709 P.2d 837;
}}}
accord
}
{\f2 \b0 \fs26 \cf5 \i1
Waller, supra,
}
}
11 Cal.4th at p. 36, 44
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
370, 900 P.2d 619.)
}}}
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
[3]
}}}
{\f2 \b0 \fs26 \cf5 \i0
}
}
[4]
}}}
{\f2 \b0 \fs26 \cf5 \i0
}
Therefore, when it is a condition of an obligor\rquote s duty that he or she be
subjectively satisfied with respect to the obligee\rquote s performance, the
subjective standard of
}
{\f2 \b0 \fs26 \cf1 \i1
honest satisfaction
}
}
is applicable. (1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, \u167\'3f
729, p. 659;
}
findType=Y&serNum=0289907211&pubNum=0101603&originatingDoc=I3ea40293fab911d9bf60c1d
57ebc853e&refType=TS&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=D
ocumentItem&contextData=(sc.Search)" }{\fldrslt
Rest.2d, Contracts, \u167\'3f 228
}}}
, coms. a, b.) \u8220\'3fWhere the contract involves matters of fancy, taste or
judgment, the promisor is the sole judge of his satisfaction. If he asserts
}
{\f2 \b0 \fs26 \cf1 \i1
in good faith
}
}
that he is not satisfied, there can be no inquiry into the reasonableness of his
attitude. [Citations.] [\u182\'3f] Traditional examples are employment
contracts ... and agreements to paint a portrait, write a literary or
}
{\f2 \b1 \fs26 \cf1 \i0
*364
}
}
scientific article, or produce a play or vaudeville act. [Citations.]\u8221\'3f (1
Witkin, Summary of Cal. Law,
}
{\f2 \b0 \fs26 \cf1 \i1
supra,
}
}
\u167\'3f 730, p. 660; accord
}
{\f2 \b0 \fs26 \cf5 \i1
Schuyler v. Pantages
}
}
(1921) 54 Cal.App. 83, 85\u8211\'3f87, 201 P. 137.)
}}}
In such cases, \u8220\'3fthe promisor\rquote s determination that he is not
satisfied,
}
{\f2 \b0 \fs26 \cf1 \i1
when made in good faith,
}
}
has been held to be a defense to an action on the contract. [Citations.]\u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Mattei v. Hopper
}
}
(1958) 51 Cal.2d 119, 123, 330 P.2d 625,
}}}
italics added.)
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Therefore, the trial court erred in deferring entirely to what it characterized as
}
Warner\rquote s
}
}
}
\u8220\'3fcreative decision\u8221\'3f in the handling of the development deal. If
}
Warner
}
}
}
acted in bad faith by categorically rejecting
}
Locke\rquote s
}
}
}
work and refusing to work with her, irrespective
}
{\f2 \b1 \fs26 \cf1 \i0
**926
}
}
of the merits of her proposals, such conduct is not beyond the reach of the law.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
\par
{\li0 \f2 \b0 \ri0 \fs26 \cf1 \qc \i0
b.
}
{\f2 \b0 \fs26 \cf1 \i1
Locke
}
}
}
presented evidence from which a trier of fact reasonably could infer
}
Warner
}
}
}
breached the agreement by refusing to consider her proposals in good faith.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
[5]
}}}
{\f2 \b0 \fs26 \cf5 \i0
}
Merely because
}
Warner
}
}
}
paid
}
Locke
}
}
}
the guaranteed compensation under the agreement does not establish
}
Warner
}
}
}
fulfilled its contractual obligation. As pointed out by
}
Locke
}
}
}
, the value in the subject development deal was not merely the guaranteed payments
under the agreement, but also the opportunity to direct and produce films and earn
additional sums, and most importantly, the opportunity to promote and enhance a
career.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Unquestionably,
}
Warner
}
}
}
was entitled to reject
}
Locke\rquote s
}
}
}
work based on its subjective judgment, and its creative decision in that regard is
not subject to being second-guessed by a court. However, bearing in mind the
requirement that subjective dissatisfaction must be an honestly held
dissatisfaction, the evidence raises a triable issue as to whether
}
Warner
}
}
}
breached its agreement with
}
Locke
}
}
}
by not considering her proposals on their merits.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
As indicated, the deposition testimony of Joseph Terry recounted a conversation he
had with Bob Brassel, a
}
Warner
}
}
}
executive, regarding
}
Locke\rquote s
}
}
}
projects. In that conversation, Brassel stated \u8220\'3f \u8216\'3fJoe, we\rquote
re not going to work with her,\u8217\'3f and then, \u8216\'3fThat\rquote s
Clint\rquote s deal.\u8217\'3f \u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Similarly, the declaration of Mary Wellnitz recalled a conversation she had with
Lance Young, a senior vice president of production at
}
Warner
}
}
}
. After discussing the script with Wellnitz, Young told her: \u8220\'3fMary, I want
you to know that I think Sondra is a wonderful woman and very talented, but, if
}
{\f2 \b1 \fs26 \cf1 \i0
*365
}
}
you think I can go down the hall and tell Bob Daly that I have a movie I want to
make with her he would tell me to forget it. They are not going to make a movie
with her here.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
The above evidence raises a triable issue of material fact as to whether
}
Warner
}
}
}
breached its contract with
}
Locke
}
}
}
by categorically refusing to work with her, irrespective of the merits of her
proposals. While
}
Warner
}
}
}
was entitled to reject
}
Locke\rquote s
}
}
}
proposals based on its subjective dissatisfaction, the evidence calls into
question whether
}
Warner
}
}
}
had an honest or good faith dissatisfaction with
}
Locke\rquote s
}
}
}
proposals, or whether it merely went through the motions of purporting to
\u8220\'3fconsider\u8221\'3f her projects.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
\par
{\li0 \f2 \b0 \ri0 \fs26 \cf1 \qc \i0
c.
}
{\f2 \b0 \fs26 \cf1 \i1
No merit to
}
Warner\rquote s
}
}
}
contention
}
Locke
}
}
}
seeks to rewrite the instant agreement to limit
}
Warner\rquote s
}
}
}
discretionary power.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Warner
}
}
}
argues that while the implied covenant of good faith and fair dealing is implied
in all contracts, it is limited to assuring compliance with the express terms of
the contract and cannot be extended to create obligations not contemplated in the
contract.
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Racine & Laramie, Ltd. v. Department of Parks & Recreation
}
}
(1992) 11
}
Cal.App
}
}
}
.
}
4th
}
}
}
1026, 1032, 14
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
335.)
}}}
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
This principle is illustrated in
}
{\f2 \b0 \fs26 \cf5 \i1
Carma Developers (Cal.), Inc. v. Marathon Development California, Inc.
}
}
(1992) 2 Cal.4th 342, 351\u8211\'3f352, 6
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
467, 826 P.2d 710,
}}}
wherein the parties entered into a lease agreement which stated that if the tenant
procured a potential sublessee and asked the landlord for consent to sublease, the
landlord had the right to terminate the lease, enter into negotiations with the
prospective sublessee, and appropriate for itself all profits from the new
arrangement.
}
findType=Y&serNum=1992069400&originatingDoc=I3ea40293fab911d9bf60c1d57ebc853e&refTy
pe=RP&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=DocumentItem&con
textData=(sc.Search)" }{\fldrslt
{\f2 \b0 \fs26 \cf5 \i1
Carma
}
}}}
recognized \u8220\'3f[t]he covenant of good faith finds particular application in
situations where one party is invested with a discretionary power affecting the
rights of another.\u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Id.,
}
}
at p. 372, 6
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
467, 826 P.2d 710.)
}}}
The court expressed the view that \u8220\'3f[s]uch power must be exercised in good
faith.\u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Ibid.
}
}
)
}}}
At the same time,
}
{\f2 \b0 \fs26 \cf5 \i1
Carma
}
}}}
upheld the right of the landlord under the express terms of the lease to freely
exercise its discretion to terminate the lease in order to claim for
itself\u8212\'3fand deprive the tenant of\u8212\'3fthe appreciated rental value of
the premises.
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Id.,
}
}
at p. 376, 6
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
467, 826 P.2d 710.)
}}}
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
In this regard,
}
{\f2 \b0 \fs26 \cf5 \i1
Carma
}
}}}
stated: \u8220\'3fWe are aware of no reported case in which a court has held the
covenant of good faith may be read to prohibit a party from doing that which is
expressly permitted by an agreement.
}
{\f2 \b1 \fs26 \cf1 \i0
**927
}
}
On the contrary, as a general matter, implied terms should never be read to vary
}
{\f2 \b1 \fs26 \cf1 \i0
*366
}
}
express terms. [Citations.] \u8216\'3fThe general rule [regarding the covenant of
good faith] is plainly subject to the exception that the parties may, by express
provisions of the contract, grant the right to engage in the very acts and conduct
which would otherwise have been forbidden by an implied covenant of good faith and
fair dealing.... [\u182\'3f] This is in accord with the general principle that, in
interpreting a contract \u8220\'3fan implication ... should not be made when the
contrary is indicated in clear and express words.\u8221\'3f 3 Corbin, Contracts,
\u167\'3f 564, p. 298 (1960).... [\u182\'3f]
}
{\f2 \b0 \fs26 \cf1 \i1
As to acts and conduct authorized by the express provisions of the contract,
}
}
no covenant of good faith and fair dealing can be implied which forbids such acts
and conduct. And if defendants were given the right to do what they did by the
express provisions of the contract there can be no breach.\u8217\'3f
[Citation.]\u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Carma Developers (Cal.), Inc., supra,
}
}
2 Cal.4th at p. 374, 6
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
467, 826 P.2d 710,
}}}
italics added.)
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
In
}
{\f2 \b0 \fs26 \cf5 \i1
Third Story Music, Inc. v. Waits
}
}
(1995) 41
}
Cal.App
}
}
}
.
}
4th
}
}
}
798, 801, 48
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
747,
}}}
the issue presented was \u8220\'3fwhether a promise to market music, or to refrain
from doing so, at the election of the promisor is subject to the implied covenant
of good faith and fair dealing where substantial consideration has been paid by the
promisor.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
In that case,
}
Warner
}
}
}
Communications obtained from TSM the worldwide right to manufacture, sell,
distribute and advertise the musical output of singer/songwriter Tom Waits.
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Third Story Music, Inc., supra,
}
}
41
}
Cal.App
}
}
}
.
}
4th
}
}
}
at pp. 800\u8211\'3f801, 48
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
747.)
}}}
The agreement also specifically stated that
}
Warner
}
}
}
Communications \u8220\'3f \u8216\'3fmay at our election refrain from any or all of
the foregoing.\u8217\'3f \u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Id.,
}
}
at p. 801, 48
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
747.)
}}}
TSM sued
}
Warner
}
}
}
Communications for contract damages based on breach of the implied covenant of
good faith and fair dealing, claiming
}
Warner
}
}
}
Communications had impeded TSM\rquote s receiving the benefit of the agreement.
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Id.,
}
}
at p. 802, 48
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
747.)
}}}
}
Warner
}
}
}
Communications demurred to the complaint, alleging the clause in the agreement
permitting it to \u8220\'3f \u8216\'3fat [its] election refrain\u8217\'3f from
doing anything to profitably exploit the music is controlling and precludes
application of any implied covenant.\u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Ibid.
}
}
)
}}}
The demurrer was sustained on those grounds.
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Ibid.
}
}
)
}}}
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
The reviewing court affirmed, holding the implied covenant was unavailing to the
plaintiff.
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Third Story Music, Inc., supra,
}
}
41
}
Cal.App
}
}
}
.
}
4th
}
}
}
at pp. 808\u8211\'3f809, 48
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
747.)
}}}
Because the agreement
}
{\f2 \b0 \fs26 \cf1 \i1
expressly
}
}
provided
}
Warner
}
}
}
Communications had the right to
}
{\f2 \b0 \fs26 \cf1 \i1
refrain
}
}
from marketing the Waits recordings, the implied covenant of good faith and fair
dealing did not limit the discretion given to
}
Warner
}
}
}
Communications in that regard.
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Ibid.;
}
}}}
{\f2 \b0 \fs26 \cf1 \i1
}
}
{\f2 \b0 \fs26 \cf5 \i1
Carma Developers
}
{\f2 \b1 \fs26 \cf1 \i0
*367
}
}
Cal.), Inc., supra,
}
}
2 Cal.4th at p. 374, 6
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
467, 826 P.2d 710.)
}}}
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Warner\rquote s
}
}
}
reliance herein on
}
{\f2 \b0 \fs26 \cf5 \i1
Third Story Music, Inc.
}
}}}
is misplaced. The
}
Locke
}
}
}
/
}
Warner
}
}
}
agreement did not give
}
Warner
}
}
}
the express right to refrain from working with
}
Locke
}
}
}
. Rather, the agreement gave
}
Warner
}
}
}
}
{\f2 \b0 \fs26 \cf1 \i1
discretion
}
}
with respect to developing
}
Locke\rquote s
}
}
}
projects. The implied covenant of good faith and fair dealing obligated
}
Warner
}
}
}
to exercise that discretion honestly and in good faith.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
In sum, the
}
Warner
}
}
}
/
}
Locke
}
}
}
agreement contained an implied covenant of good faith and fair dealing, that
neither party would frustrate the other party\rquote s right to receive the
benefits of the contract.
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Comunale, supra,
}
}
50 Cal.2d at p. 658, 328 P.2d 198;
}}}
}
{\f2 \b0 \fs26 \cf5 \i1
Waller, supra,
}
}
11 Cal.4th at p. 36, 44
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
370, 900 P.2d 619.)
}}}
Whether
}
Warner
}
}
}
violated the implied covenant and breached the contract by categorically refusing
to work with
}
Locke
}
}
}
is a question for the trier of fact.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\*\bkmkstart co_anchor_Ia828509a552d11e38578f7ccc38dc}{\*\bkmkend
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\par
{\li260 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
3.
}
{\f2 \b0 \fs26 \cf1 \i1
A triable issue exists as to whether
}
Warner
}
}
}
made a fraudulent promise.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
In the fourth cause of action,
}
Locke
}
}
}
pled at the time
}
Warner
}
}
}
entered into the agreement with her, it concealed and failed to disclose it had no
intention of honoring the agreement.
}
{\f2 \b0 \fs20 \cf1 \i0
4
}}}
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0 {
\cellx4100
\intbl
{\li0 \ri0
{\li0 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
{\f2 \b0 \fs26 \cf1 \i0
co_footnote_B00441997178112_1}
{\fldrslt
4
\par
}
}
{\li0 \ri0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs18 \cf1 \i0
Although
}
Warner
}
}
}
contends
}
Locke
}
}
}
has an unalleged claim for fraudulent concealment, the fourth cause of action
adequately pled a cause of action for fraud. In addition to pleading a promise was
made and was not fulfilled,
}
Locke
}
}
}
alleged
}
Warner
}
}
}
did not intend to perform when it made the promise. (
}
findType=L&pubNum=1000200&cite=CACIS1710&originatingDoc=I3ea40293fab911d9bf60c1d57e
bc853e&refType=LQ&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=Docu
Civ.Code, \u167\'3f 1710, subd. (4)
;
}
{\f2 \b0 \fs18 \cf5 \i1
Tenzer v. Superscope, Inc.
}
}
(1985) 39 Cal.3d 18, 30, 216 Cal.Rptr. 130, 702 P.2d 212, 5 Witkin,
Summary of Cal. Law (9th ed. 1988) Torts, \u167\'3f 685, pp. 786\u8211\'3f787.)
\par
}
}
}
}
\cell \row }
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
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}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\cellx600
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
\intbl
{\li39 \ri39
{\li39 \f2 \b0 \ql \ri39 \fs26 \cf1 \i0
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
}
{\f2 \b1 \fs26 \cf1 \i0
**928
}
}
The trial court held that because
}
Warner
}
}
}
did not breach any express or implied obligations owed to
}
Locke
}
}
}
, she could not prevail on the fraud claim. However, as explained above, a triable
issue exists as to whether
}
Warner
}
}
}
breached the agreement with
}
Locke
}
}
}
. Therefore, the trial court\rquote s rationale for disposing of the fraud claim is
undermined.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
[6]
}}}
{\f2 \b0 \fs26 \cf5 \i0
}
The trial court also ruled
}
Locke
}
}
}
could not prevail on the fraud claim because there was no evidence
}
Warner
}
}
}
had a fraudulent intent at the time the parties entered into the contract. The
trial court acknowledged
}
Locke
}
}
}
\u8220\'3ffiled a declaration of her development assistant, Mary Wellnitz, in
which Ms.
}
{\f2 \b1 \fs26 \cf1 \i0
*368
}
}
Wellnitz states that a
}
Warner
}
}
}
}
Bros
}
}
}
. executive, Lance Young, remarked in late 1992 that
}
Warner
}
}
}
}
Bros
}
}
}
. was \u8216\'3fnot going to make a movie\u8217\'3f with Ms.
}
Locke
}
}
}
. [
}
Locke
}
}
}
] also offered the deposition testimony of a third party, Joe Terry, in which he
recalled a 1993 conversation with another
}
Warner
}
}
}
}
Bros
}
}
}
. production executive, Bob Brassel, in which Mr. Brassel said that the studio was
not going to work with Ms.
}
Locke
}
}
}
. However, the Court does not believe that these statements would permit a jury to
infer that two years earlier, when plaintiffs and the defendant entered into their
contract,
}
Warner
}
}
}
}
Bros
}
}
}
. intended to breach its obligations.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
[7]
}}}
{\f2 \b0 \fs26 \cf5 \i0
}
We disagree. Fraudulent intent must often be established by circumstantial
evidence, and may be \u8220\'3finferred from such circumstances as defendant\rquote
s ... failure even to attempt performance, ...\u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Tenzer v. Superscope, Inc., supra,
}
}
39 Cal.3d at p. 30, 216 Cal.Rptr. 130, 702 P.2d 212.)
}}}
Based on the above evidence that
}
Warner
}
}
}
had expressed an absolute unwillingness to work with
}
Locke
}
}
}
, a trier of fact reasonably could infer
}
Warner
}
}
}
never intended to give
}
Locke\rquote s
}
}
}
proposals a good faith evaluation and that
}
Warner
}
}
}
entered into the agreement with
}
Locke
}
}
}
solely as an accommodation to Eastwood, who had promised to reimburse
}
Warner
}
}
}
for any losses under the agreement. The trial court erred in concluding such an
inference could not be drawn from the evidence. We conclude the issue of fraudulent
intent is one for the trier of fact.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\*\bkmkstart co_anchor_Ia828509b552d11e38578f7ccc38dc}{\*\bkmkend
co_anchor_Ia828509b552d11e38578f7ccc38dc}
\par
{\li260 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
4.
}
{\f2 \b0 \fs26 \cf1 \i1
Locke
}
}
}
waived any error in the trial court\rquote s ruling with respect to her causes of
action alleging gender bias.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
[8]
}}}
{\f2 \b0 \fs26 \cf5 \i0
}
}
Locke\rquote s
}
}
}
opening brief does not assert any error in the trial court\rquote s disposition of
her two causes of action alleging sex discrimination. Accordingly, this court may
treat the claims as having been waived.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
[9]
}}}
{\f2 \b0 \fs26 \cf5 \i0
}
Belatedly,
}
Locke\rquote s
}
}
}
reply brief contends she presented evidence which raised the inference she was
discriminated against because of her gender. \u8220\'3fOrdinarily,
[appellants\rquote ] failure to raise an issue in their opening brief waives the
issue on appeal. [Citation.]\u8221\'3f
}
(
}
{\f2 \b0 \fs26 \cf5 \i1
Tisher v. California Horse Racing Bd.
}
}
(1991) 231 Cal.App.3d 349, 361, 282 Cal.Rptr. 330;
}}}
accord
}
{\f2 \b0 \fs26 \cf5 \i1
1119 Delaware v. Continental Land Title Co.
}
}
(1993) 16
}
Cal.App
}
}
}
.
}
4th
}
}
}
992, 1004, 20
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
438;
}}}
}
{\f2 \b0 \fs26 \cf5 \i1
Regency Outdoor Advertising v. Carolina Lanes, Inc.
}
}
(1995) 31
}
Cal.App
}
}
}
.
}
4th
}
}
}
1323, 1333, 37
}
Cal.Rptr
}
}
}
.
}
2d
}
}
}
552.)
}}}
}
Locke
}
}
}
has not shown good cause for the untimely contention. Therefore, we disregard
}
Locke\rquote s
}
}
}
argument the trial court erred in granting summary judgment on the first and third
causes of action.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\*\bkmkstart co_anchor_Ia828509c552d11e38578f7ccc38dc}{\*\bkmkend
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\par
{\li260 \f2 \b0 \ql \ri0 \fs26 \cf1 \i0
}
{\f2 \b1 \fs26 \cf1 \i0
*369
}
}
5.
}
{\f2 \b0 \fs26 \cf1 \i1
Remaining issues not reached.
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
Because we find triable issues are present with respect to the second and fourth
causes of action, it is unnecessary to address
}
Locke\rquote s
}
}
}
remaining contentions.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\*\bkmkstart co_anchor_Ia828509d552d11e38578f7ccc38dc}{\*\bkmkend
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\par
{\li0 \f2 \b0 \ri0 \fs26 \cf1 \qc \i0
{\f2 \b0 \fs26 \cf1 \i1
{\f2 \b0 \fs26 \cf1 \i1
DISPOSITION
\par
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
The judgment is reversed with respect to the second and fourth causes of action and
is otherwise affirmed.
}
Locke
}
}
}
to recover costs on appeal.
\par
}
}
}
\u160\'3f
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
KITCHING
}}}
\sb260
and
}
ALDRICH
}}}
\sb260
, JJ., concur.
\par
}
}
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs26 \cf1 \i0
{\li0 \f2 \qj \b1 \ri0 \fs26 \cf26 \i0
{\*\bkmkstart co_allCitations_1}{\*\bkmkend co_allCitations_1}
All Citations
\par
}
}
57 Cal.App.4th 354, 66 Cal.Rptr.2d 921, 97 Cal. Daily Op. Serv. 6932, 97 Daily
Journal D.A.R. 11,124
\par
}
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End of Document
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}\sect }

CONTRACT-Practice Brief-Locke V Warner Bros Inc-Breach, Implied Covenant of Good Faith and Fair Dealing

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