Filed 10/8/21 Ablesoft v. Walt Disney Company CA2/2

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

ABLESOFT, INC.,

Plaintiff and Appellant,

v.

THE WALT DISNEY

COMPANY et al.,

Defendants and

Respondents. B30415 5

(Los Angeles County

Super. Ct. No. BC673736)

APPEAL from a judgment of the Superior Court of Los

Angeles County , Dalila C. Lyons, Judge. Reversed and remanded

with directions.

Hamrick & Evans, A. Raymond Hamrick III, Charles

Rainey and Jonathan Dutton for Plaintiff and Appellant.

Mitchell Silberberg & Knupp, Lucia E. Coyoca and

Christopher A. Elliott for Defendants and Respondents.2 Ablesoft, Inc. (Ablesoft) was one of several plaintiffs who

sued defendants The Walt Disney Company and Buena Vista

Television, LLC, formerly known as Buena Vista Television, Inc.

(collectively, Buena Vista)

, 1 for breach of contract and related

causes of action

. The trial court granted Buena Vista’s motion for

summary adjudication against Ablesoft as to all its causes of

action on the ground that Ablesoft lack ed standing to sue. We

reverse. 2

BACKGROUND

A. Underlying Facts

On March 31, 1993, William Nye, James McKenna, Erren

Gottlieb, KCTS

- TV, and Rabbit Ears Productions, Inc. (Rabbit

Ears) entered into an agreement with Buena Vista (BV

Agreement) for 50 percent of the net profits resulting from the

production and distributi on of the television series, Bill Nye the

Science Guy (series).

Millennium Media Group Holdings, Inc. (MMG)

purportedly made a loan to Rabbit Ears in September 1993

secured by a lien on Rabbit Ears’ s assets. When Rabbit Ears

apparently defaulted on the l oan, MMG foreclosed the lien in

1997 and reportedly sold Rabbit Ears ’s assets to Microleague

1 B uena Vista Television, LLC is a subsidiary of The Walt

Disney Company.

2 B ecause we conclude summary adjudication should not

have been granted, we do not reach Ablesoft’s contention the trial

court abused its discretion by denying a second continuance of

the summary adjudication hearing. We do, however, briefly

summarize Ableso ft’s two requests for a continuance to provide a

clear understanding of the proceedings.3

Multimedia, Inc. (Microleague) in February 1997. The sale was

said to include Rabbit Ears’ s rights under the BV Agreement.

Ablesoft purportedly was a wholly owne d subsidiary of

Microleague. In December 1997, Microleague declared

bankruptcy

. Ablesoft apparently emerged as the surviving

company, owning all of Rabbit Ears’ s rights under the BV

Agreement.

On April 29, 1999, Buena Vista drafted an amendment

(1999 Am endment) to the BV Agreement

. Rabbit Ears was

replaced as a signatory by “Microleague Multimedia, Inc.,

successor and assignee to the interests of Rabbit Ears

Productions, Inc.” Buena Vista, Microleague

, and the other

parties executed the 1999 Amendment.

In 2006, John Herson purchased Ablesoft from the “Penn

Janney” fund. Shortly thereafter, CEO Herson received a check

from Disney in connection with the series. Herson contacted a

Buena Vista (Disney) representative to ask about the payment.

In response , the representative provided Herson with a copy of

the BV Agreement

.

From at least 200 6 through 2018, Buena Vista issued

accounting statements pursuant to the BV Agreement, replacing

Microleague with Ablesoft as a paid participant for the series. To

date , Buena Vista has paid Ablesoft nearly $1 million under the

BV Agreement.

B. Underlying Proceedings

A lawsuit was filed against Buena Vista following its

purported failure to account for and pay profits from the

exploitation of the series pursuant to the terms and conditions of

the BV Agreement. The operative pleading was the fourth

amended complaint. Plaintiffs were Nye, McKenna, Gottlieb,4

KCTS

- TV, and “Ablesoft, Inc. [formerly known as] Rabbit Ears

Productions Inc.” Plaintiffs alleged that Ablesoft wa s a successor

in interest to Rabbit Ears. The complaint stated causes of action

for fraudulent concealment, fraudulent misrepresentation,

fraudulent inducement/false promise, breach of contract, breach

of fiduciary duty, accounting, breach of the covenant of good faith

and fair dealing, and monies had and received.

Buena Vista filed two motions for summary adjudication of

plaintiffs’ causes of action. 3 In one of the motions, Buena Vista

asserted Ablesoft did not have standing to sue because it was not

a party to the BV Agreement. Nor could Ablesoft show it was a

successor

- in

- interest to Rabbit Ears ’s rights because there was no

admissible evidence of the transfer of assets “from Rabbit Ears to

MMG or from Microleague to Ablesoft.”

Ablesoft filed opposition and evidence to support standing.

The hearing was to occur on August 7, 2019.

Plaintiffs filed an ex parte application to continue the

summary adjudication hearing to obtain additional discovery.

The trial court granted the continuance over Buena Vista’s

o bjections.

At the continued hearing on October 24, 20 19

, the trial

court issued a tentative ruling granting Buena Vista’s summary

adjudication against Ablesoft. In response, Ablesoft’s counsel

orally moved for a continu ance to obtain further discovery on the

issue of standing and/or to present certain newly discovered

evidence to demonstrate standing

. The court agreed to continue

3 B ecause of the nature of the summary adjudication

proceedings in this case, we merely summarize them here. For

clarity and to avoid repetition, we address them at l ength in the

next section.5

the hearing to allow Ablesoft to file a properly notice d motion

pursuant to Code of Civil Procedure section 437c, subdivision

(h)

. 4

At the December 4, 20 19 summary adjudication hearing,

the trial court denied Abl e soft’s noticed motion to continue and

granted Buena Vista’s motion for summary adjudication on the

issue of Ablesoft ’s standing. T he court entered judgment on

January 22, 2020

, against Ablesoft and in favor of Buena Vista on

all causes of action. Ablesoft filed a timely notice of appeal.

DISCUSSION

A. Standing

“ Every action must be prosecuted in the name of the real

party in interest, except as otherwise provided by statute. ”

( 

### § 367.) “ It is elementary that a party asserting a claim must

have standing to do so. In asserting a claim based upon a

contract, this generally requires the party to be a signatory to t he

contract, or to be an intended third party beneficiary. ” ( Berclain

America Latina v. Baan Co. (1999) 74 Cal.App.4th 401, 405.)

B. Summary Adjudication and Standard of Review



### “A motion for summary adjudication may be made by

itself or as an alternative to a motion for summary judgment

and shall proceed in all procedural respects as a motion for

summary judgment.” (§ 437c, subd. (f)(2).)

The trial court must grant summary judgment when the

moving and opposition papers demonstrate that there is no

triable issue of material fact and the moving party is entitled to

judgment as a matter of law. 

### (§ 437c, subd. (c).) A defendant

4 Undesignated s tatutory references are to the Code of Civil

Procedure

.6

moving for summary judgment has the initial burden of

producing evidence that a cause of action lacks merit because the

plaintiff cannot establish an element of the cause of action or

there is a complete defense. ( 

### § 437c, subd. (p)(2) ; Aguilar v.

Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853; Husman v.

Toyota Motor Credit Corp. (2017) 12 Cal.App.5th 1168, 1179

–

1180.) If the defendant meets this initial burden, the burden

then shifts to the plaintiff to produce evidence showing there is a

triable issue of material fact. ( 

### § 437c, subd. (p)(2); Aguilar,

supra, at p. 850; Husman, supra, at pp. 1179

– 1180.)

An appellate court reviews an order granting summary

judgment de novo. ( Coral Construction, Inc. v. City and County of

San Francisco (2010) 50 Cal.4th 315, 336.) In determining

whether there are triable issues of material fact, we consider all

the evidence set forth by the parties, except that to which

objections have been made and properly sustained. 

### (§ 437c,

subd. (c); Guz v. Bechtel National, Inc. (2000) 24 Cal .4th 317,

334.) We accept as true the facts supported by plaintiff ’ s

evidence and the reasonable inferences therefrom ( Sada v

. Robert

F. Kennedy Medical Center (1997) 56 Cal.App.4th 138, 148),

resolving evidentiary doubts or ambiguities in plaintiff's favor

( Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768)

.

C

. Buena Vista Me e t s Its Initial Burden Showing

Ablesoft Lack s Sufficient Evidence of Standing

In moving for summary adjudication against Ablesoft,

Buena Vista need not conclusively show A blesoft ’s lack of

standing, but could establish that Ablesoft “ does not possess, and

cannot reasonably obtain, needed evidence” to support standing.

( Aguilar v. A tlantic Richfield Co.

, supra, 25 Cal.4th at p. 854 ; see

Henderson v. Equilon Enterprises, LLC (2019) 40 Cal.App.5th7

1111, 1116 [“[t]o meet its initial burden in moving for summary

judgment, a defendant must present evidence that either

‘conclusively negate[s] an element of the plaintiff's cause of

action’ or ‘show[s] that the plaintiff does not possess, and cannot

reasonably obtain,’ evidence necessary to establish at least one

element of the cause of action”] .)

In its motion, Buena Vist a argued the following evidence

that Ablesoft had produced during discovery was either

insufficient and/or inadmissible to show its standing as a

successor

- in

- interest to Rabbit Ears : (1) A 1997 press release

announcing Microleague’s acquisition of Rabbit Ears from MMG

and (2) a printout of an uncertified Form 8

- K 5 from Microleague

,

attached to which was an unsigned asset acquisition agreement

between MMG and Microleague. The unsigned agreement

included a “Background” description of MMG’s earlier acquisition

of Rabbit Ears. Buena Vista further argued that Ablesoft’s

current CEO, when deposed by Buena Vista, testified he acquired

Ablesoft in 2006 and had no personal knowledge or

documentation of MMG’s original acquisition of Rabbit Ea rs ’ s

assets or of Microleague’s acquisition of Rabbit Ears’ s assets from

MMG. Buena Vista maintained because Ablesoft could not and

did not obtain the necessary evidence of its status as a successor

in

- interest under the BV Agreement, Ablesoft did not hav e

standing to sue.

5 A “ Form 8

- K is the ‘ current report ’ companies must file

with the SEC to announce major events that shareholders should

know about. ” ( Sec urities and Exch ange Com

. , Form 8

- K

< https://www.sec.gov/fast

- answers/answersform8khtm.html > [ as

of Oct. 1, 2021] , archived at < https://perma.cc/DJ4X

- WR6A > ; see

Hawran v. Hixson (2012) 209 Cal.App.4th 256, 281 .)8 The trial court later sustained Buena Vista’s objections to

the evidence Ablesoft had produced during discovery as

inadmissible for foundational and hearsay reasons. Ablesoft does

not challenge this ruling on appeal.

D. The Burden Shifts to Ablesoft, and the Trial Court

Grants Summary Adjudication

The burden shifted to Ablesoft to demonstrate a triable

issue of material fact as to standing

. ( § 437c, subd. (p)(2 ).)

In its opposition to the summary adjudication motion and

in later filings in conjunction with its second continuance request

, Ablesoft presented the following evidence : (1) CEO Herson’s

declaration describing his understanding of the chain of title;

(2) a copy o f the 1999 Amendment

, and (3) certified copies of the

Form 8

- K and “Articles of Amendment

– Domestic Business

Corporation” (Articles of Amendment), which Microleague had

filed in November 1998 with the Pennsylvania Department of

State reflecting its name change to Ablesoft. In a separate

statement, Ablesoft identified three facts unopposed by Buena

Vista: (1) Buena Vista had been issuing annual accounting

statements to A blesoft from at least 2006 to the present (i.e.

, for

the last 15 years)

, (2) during that same period, Disney (Buena

Vista) continued to send Ablesoft profit participation statements

and checks for the series

, and (3) when CEO Herson questioned

Ablesoft’s e ntitlement to a 2006 check, a Disney representative

responded with a copy of the BV Agreement. Ablesoft also asked

the trial court to take judicial notice of the certified copies of the

Form 8

- K and the Articles of Amendment.

Following the hearing on Dec ember 4, 2019, the trial court

issued a written ruling denying Ablesoft’s motion to continue and

refusing to admit into evidence the newly certified copies of the9

Form 8

- K and the Articles of Amendment

. T he court granted

Ablesoft’s request for judicial no tice of the certified copies of the

Articles of Amendment and Form 8

- K, excluding any hearsay

statements they may contain. Thus, as a result of these and

other evidentiary rulings, Ablesoft was left with the three

undisputed facts concerning Buena Vista’s accounting and

payments to Ablesoft, the 1999 Amendment

, and the judicially

noticed Articles of Amendment and Form 8

- K in opposing Buena

Vista’ s motion for summary adjudication.

In a separate written ruling, t he trial court granted Buena

Vista summary ad

judication against Ablesoft for lack of standing.

The court found Ablesoft had no “competent evidence ” it was the

successor

- in

- interest to signatory Rabbit Ears. The court

reasoned that even if the excluded Form 8

- K and Articles of

Amendment were conside red, Ablesoft would still be unable to

supply the missing links in the chain of Ablesoft’s title to Rabbit

Ears ’s rights: (1) MMG’s acquisition of Rabbit Ears’ s rights and

(2) Ablesoft’s acquisition of Rabbit Ears’ s rights from

Microleague.

E. Triable Issues of Fact Preclude Summary

Adjudication Regarding Ablesoft’s Standing

The issue on appeal is whether Ablesoft met its burden by

producing sufficient evidence from which a trier of fact could

reasonably infer Ablesoft had standing to pursue t his suit.

( Sharufa v. Festival Fun Parks, LLC (2020) 49 Cal.App.5th 493,

497 [ to determine whether a “defendant is entitled to summary

[judgment]

. . . we review the entire record and ask whether a

reasonable trier of fact could find in plaintiff ’ s favor” ] .) Because

our review is de novo, we can independently consider admissible

evidence even though the trial court did not consider it.10

( Tchorbadjian v. Western Home Ins. Co. (1995) 39 Cal.App.4th

1211, 1217 [court reviewing summary judgment must consider all

evidence presented “except where objections are properly

sustained”] .) Accordingly, we consider the 1999 Amendment even

though the trial court disregarded it.

The record reveals Ablesoft’s engaged in a two

- fold

approach in opposing Buena Vista’s summary adjudication

motion. To show triable issue s relative to standing, Ablesoft

presented evidence (1) supplying the missing evidentiary links in

the chain of title to Rabbit Ears ’s rights and ( 2) demonstrating by

Buena Vista’s express agreement and course of conduct that

Ablesoft was a proper party under the BV Agreement. As the

evidence in support of Ablesoft’s first approach was excluded, we

examine Ablesoft’s evidence in support of the secon d approach

—

the 1999 Amendment, the judicially noticed Articles of

Amendment, and Buena Vista’s 15

- year accounting and payment

practices with respect to Ablesoft

. From this evidence a

reasonable trier of fact could find in Ablesoft’s favor

. 6

The identity of the parties to a contract, along with other

contractual terms, are shown by the language of the contract and

admissible parol evidence. (See Zelkin v. Caruso Discount Corp.

(1960) 186 Cal.App.2d 802, 806

– 807 [identities of real parties in

interest under a contract were “clearly revealed by parol

evidence”].) And the “[a]cts of the parties, subsequent to the

execution of the contract and before any controversy has arisen

as to its effect, may be looked to in determining the meaning.”

( 1 Wi tkin, Summary of Cal

. Law (11th ed. 20 17 ) Contracts, § 772

,

6 We do not consider Evidence Code section 622, which

Ablesoft raise d for the first time in its reply brief on appeal. (See

Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 76 4

– 765.)11

p. 828 ; see also Fisher v. Allis

- Chalmers Corp. Product Liability

Trust (2002) 95 Cal.App.4th 1182, 1190

– 11 92 [evidence of

successor corporation’s conduct was relevant to determine

whether it agreed to assume liability for the plaintiff’s claim].)

This rule is not limited to joint conduct by parties to a contract,

but applies also to the acts of one party with knowledge of the

contract terms

. ( Southern Cal. Edison Co. v. Superior Court

(1995) 37 Cal.App.4th 839, 851 ; see also Sanfran Co. v. Rees Blow

Pipe Mfg. Co

. (1959) 168 Cal.App.2d 191, 205 [“ k nowledge by any

agent of the corporation, whether presently an officer or not, is

the knowledge of the corporation”]. )

Buena Vista expressly agreed in the 1999 Amendment that

Microleague was a party to the contract. Buena Vista drafted

and executed that amendment, which stated that Microleague

was the “ successor and assignee to the interests of [Rabbit Ears].”

Whether this statement is considered as contractual language in

its own right or simply as a statement by a party to the contract

interpreting the BV Agreement’s terms, it is powerful evidence of

Microleague’s status as the contractual party to which Buena

Vista owed its obligations, and a jury could reasonably so find.

Ablesoft also produced sufficient evidence showing that it

was the same entity as Microleague. The judicially noticed

Articles of Amendment documented Microleague’s name change

to Ablesoft. “ ‘ It is the consequence of judicial notice that the

“ fact ” noticed is, in effect, treated as true for purposes of proof. ’

[Citation.] “ Thus, ‘ [j]udicial notice has been characterized as a

“ substitute for formal proof. ” ’ ” ( People v. Moore (1997) 59

Cal.App.4th 168, 185.)

Moreover, Buena Vista actually paid Ablesoft nearly

$1 million under the BV Agreement for 15 years, for which it also12

furnished Ablesoft with an annual accounting and regular profit

participation statements

, apparently wit hout objection by any

other person or entity. This course of conduct was consistent and

it was evidence that Ablesoft’s status as a party to the contract

was a triable issue.

Buena Vista argues this evidence fails to raise a triable

issue of fact. Buena Vista makes much of Ablesoft’s belated

reliance on the 1999 Amendment as evidence of its standing

. 7

But, as Buena Vista acknowledges, the trial court did not even

consider this evidence. Buena Vista also makes the rather

surprising assertion that the 1999 Amendment would have been

properly excluded as inadmissible hearsay relative to s tanding.

This was Buena Vista’s evidence, submitted in support of its

summary adjudication motions. Bue na Vista cannot have it both

ways: Buena Vista cannot claim the 1999 Amendment is

admissible when the evidence buttresses its position, but then

claim the evidence is inadmissible when it undermines Buena

Vista’s position.

Additionally, Buena Vista mainta ins the 1999 Amendment

cannot be viewed as reflecting its intent or agreement that

Microleague is Rabbit Ears’ s successor

- in

- interest

, but merely

Buena Vista’s “ belief

” based on Ablesoft’s representations.

During oral argument before this court, Buena Vista ’s appellate

7 A blesoft did not refer to the 1999 Amendment in its

opposition to Buena Vista’s summary adjudication motion. The

1999 Amendment was first mentioned in counsel’s declaration in

support of Ablesoft’s second request fo r a continuance. It was

argued for the first time as evidence of standing in Ablesoft’s

reply to Buena Vista’s opposition to the second request for a

continuance.13

counsel made a similar point when asked about Buena Vista’s 15

years of profit payments to Ablesoft. Counsel explained Buena

Vista made the payments in the mistaken belief that Ablesoft

was a proper party under the BV Agreement as represented by

Ablesoft. Buena Vista’s belief and intent and Ablesoft’s

entitlement to payments under the BV Agreement are triable

issues of fact.

Finally, Buena Vista argues its payment history cannot

prevent it fr om challenging Ablesoft’s standing because of waiver

or equitable estoppel. We agree that neither applies in this case. 8

8 For the first time Ablesoft argues the applicability of

Evidence Code section 622 in its r eply brief. Under the

circumstances, we will not consider it.14 DISPOSITION

The judgment is reversed, and the matter is remande d for

further proceedings on Ablesoft’s complaint

. Ablesoft is to

recover its costs on appeal.

LUI, P. J.

We concur:

ASHMANN

- GERST, J.

CHAVEZ, J

.