Court Opinion

ID: 9954196
Source: CourtListenerOpinion
Date Created: 2024-03-25 20:03:16.307011+00
Date Added: 2024-06-11T08:11:52.850329
License: Public Domain

Filed 3/25/24 Varuna Entertainment v. Ball CA2/2
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                         SECOND APPELLATE DISTRICT
                                        DIVISION TWO

 VARUNA ENTERTAINMENT,                                               B324393
 INC. et al.,
                                                                     (Los Angeles County
           Plaintiffs and Appellants,
                                                                     Super. Ct. No.
           v.                                                        20STCV27364)
 PREMA BALL et al.,
           Defendants and Respondents.

      APPEAL from a judgment the Superior Court of Los
Angeles County. Mark V. Mooney, Judge. Affirmed in part and
reversed in part.
      DeClercq Law and William B. DeClercq for Plaintiffs and
Appellants.
      Safarian Choi & Bolstad, David C. Bolstad and Alexis
Ashjian for Defendants and Respondents.

                __________________________________________
       An independent contractor began developing a television
show while working at an entertainment company. He left the
company, taking with him the show’s development file, which he
secretly sold to a cable channel. The show then aired on the cable
channel as a successful series. The entertainment company sued
the independent contractor for conversion, breach of contract,
declaratory relief, and other claims. The trial court determined
the claims were untimely and dismissed the suit after sustaining
a demurrer on statute of limitations grounds. We conclude, as to
the conversion, breach of contract, and declaratory relief claims,
the discovery rule was sufficiently pleaded to toll the applicable
statutes of limitations. We reverse the judgment of dismissal as
to those causes of action. We affirm the judgment of dismissal as
to the remaining causes of action.
       FACTUAL AND PROCEDURAL BACKGROUND
I.     Facts
       A.    Parties
       Plaintiffs are Varuna Entertainment, Inc. (Varuna), which
creates and produces television shows and films, and its owner,
Ali Bazzy (Bazzy) (collectively plaintiffs). Defendants are Prema
Ball (Ball), who worked for Varuna as an independent contractor,
and Kick Punch Studios FMV, LLC, also known as Skip Film(s)
(collectively defendants).
       B.    Reality Television Show
       In 2003, Varuna hired Ball under a written work made for
hire contract. That meant Varuna owned all of Ball’s work
product and all rights. The contract was renewed annually
through June 28, 2011.
       In 2009, Ball began developing for Varuna a reality
television show entitled Gold Divers. The show was to feature

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gold miners and off-shore gold mining on the coast of Alaska.
Ball researched the concept, contacted and interviewed miners,
and visited Alaska. Jason Morgan (Morgan), who co-owned
Varuna at the time, worked with Ball to develop Gold Divers.1
       Ball wished to go into business for himself. In
“approximately 2012,” Ball left Varuna and secretly made off
with Gold Divers’s electronic and hard copy development file.
Without apprising Varuna, Ball sold the development file to the
Discovery Channel Network (Discovery Channel). The show
continues to air on the Discovery Channel as Bering Sea Gold
and on the Discovery Channel UK as Gold Divers. Skip Films
assisted Ball with the sale despite knowing Gold Divers belonged
to Varuna. Both Ball and Skip Films continue to be compensated
by the Discovery Channel for both versions of the show.
       By chance in 2018, Morgan saw the UK version of Gold
Divers at an airport after noticing another passenger watching
the show. Morgan investigated and confirmed Ball’s theft and
sale of the show to the Discovery Channel. Morgan told Bazzy
what he had found. This lawsuit followed in 2020.
       C.    Stone Circle Transaction
       Prior to 2012, Ball solicited Bazzy to invest in Ball’s
production company, Stone Circle Films, Inc. (Stone Circle). On
January 1, 2012, Bazzy invested significant funds in Stone Circle
in exchange for part ownership of the company stocks. Ball never
disclosed to Bazzy that he had taken Gold Divers’s development
file with the intention of profiting from it.

     1 Morgan was no longer affiliated with Varuna as of
December 31, 2011. Bazzy has since been its sole owner.

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II.    Procedural Background
       Plaintiffs filed a complaint against defendants on July 21,
2020, and then a first amended complaint. Defendants demurred
to the first amended complaint. The trial court sustained
defendants’ demurrer with leave to amend.
       On April 13, 2021, plaintiffs filed a second amended
complaint alleging six causes of action: conversion, conversion
under the continuous accrual doctrine, and declaratory relief
against defendants; breach of contract, and breach of contract
under the continuous accrual doctrine against Ball alone; and a
cause of action by Bazzy against Ball for fraudulent omission.
Defendants demurred, again arguing plaintiffs failed to state a
claim for relief and the statutes of limitations barred all claims.
In opposition, plaintiffs asserted the discovery rule, the
fraudulent concealment doctrine, and the continuous accrual
doctrine applied.
       Following a hearing on June 23, 2021, the trial court
sustained defendants’ demurrer to the second amended complaint
in its entirety without leave to amend.2 On October 9, 2022, the
court entered a judgment of dismissal. Plaintiffs timely
appealed.

      2 No statement of decision appears in the record. However,
the reporter’s transcript of the June 23, 2021 hearing shows the
trial court ruled plaintiffs had failed to state a cause of action for
fraudulent omission. The court also concluded the discovery rule,
fraudulent concealment doctrine, and continuous accrual doctrine
were either insufficiently pleaded or inapplicable.

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                             DISCUSSION
I.     Standard of Review
       On appeal from a judgment of dismissal after an order
sustaining a demurrer, “we examine the operative complaint
de novo to determine whether it alleges facts sufficient to state a
cause of action under any legal theory.” (T.H. v. Novartis
Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162; see Aryeh v.
Carson Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1191
[application of a statute of limitations based on facts alleged in a
complaint is a legal question subject to de novo review].) “ ‘ “ ‘We
treat the demurrer as admitting all material facts properly
pleaded, but not contentions, deductions or conclusions of fact or
law.’ ” ’ ” (Centinela Freeman Emergency Medical Associates v.
Health Net of California, Inc. (2016) 1 Cal.5th 994, 1010.)
       We must also decide whether there is a reasonable
possibility the defects in the operative complaint can be cured by
amendment. (McClain v. Sav-On Drugs (2017) 9 Cal.App.5th
684, 695.) Plaintiffs proffer no specific suggestions on how to
further amend the second amended complaint, and we perceive
no viable way to do so. The propriety of the dismissal in this case
turns entirely on whether the operative complaint is timely and
states one or more viable causes of action.
II.    Conversion and Breach of Contract Claims
       A.     Applicable Statutes of Limitation
       A statute of limitations states the period in which a
plaintiff must bring suit or be barred. (Aryeh v. Carson Business
Solutions, Inc., supra, 55 Cal.4th at p. 1191.) The statute of
limitations for plaintiffs’ causes of action for conversion and
breach of contract are three and four years, respectively. (Code
Civ. Proc., §§ 338, subd. (c), 337). These limitation periods

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generally begin to run when the causes of action accrue, which is
normally the date of injury. (Bernson v. Browning-Ferris
Industries (1994) 7 Cal.4th 926, 931; AmerUS Life Ins. Co. v.
Bank of America, N.A. (2006) 143 Cal.App.4th 631, 639
[conversion—date of wrongful taking]; Ram’s Gate Winery, LLC v.
Roche (2015) 235 Cal.App.4th 1071, 1084 [breach of contract—
date of breach].)
       Plaintiffs alleged their injuries—the theft and sale of Gold
Divers’s development file—occurred in 2012.3 Plaintiffs
commenced their suit in 2020, well after the applicable limitation
periods had expired. Nonetheless, plaintiffs urge their
conversion and breach of contract claims are not time-barred
because they pleaded sufficient facts to invoke the discovery rule.
We agree.
       B.    Discovery Rule
       The discovery rule “postpones accrual of a cause of action
until the plaintiff discovers, or has reason to discover, the cause
of action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th
797, 807; accord, Pooshs v. Philip Morris USA, Inc. (2011) 51
Cal.4th 788, 797.) “Under the discovery rule, the statute of
limitations begins to run when the plaintiff suspects or should

      3 In the operative complaint, plaintiffs allege Ball took the
file when he left his job at Varuna in “approximately 2012.” At
the most recent demurrer hearing, plaintiffs’ counsel
acknowledged Bering Sea Gold “started actually airing in 2012.”
(Physicians Committee for Responsible Medicine v. KFC Corp.
(2014) 224 Cal.App.4th 166, 180 [“In sustaining a demurrer, the
trial court may take into account as admissions against interest
statements made in argument, and may rely on concessions made
by plaintiff’s counsel during oral argument to show there was no
basis for a cause of action”].)

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suspect that her injury was caused by wrongdoing, that someone
has done something wrong to her.” (Jolly v. Eli Lilly & Co. (1988)
44 Cal.3d 1103, 1110.) But, “[i]n order to rely on the discovery
rule for delayed accrual of a cause of action, ‘[a] plaintiff whose
complaint shows on its face that his claim would be barred
without the benefit of the discovery rule must specifically plead
facts to show (1) the time and manner of discovery and (2) the
inability to have made earlier discovery despite reasonable
diligence.’ ” (Fox v. Ethicon Endo-Surgery, Inc., supra, 35 Cal.4th
at p. 808.)
       Relying heavily on NBCUniversal Media, LLC v. Superior
Court (2014) 225 Cal.App.4th 1222 (NBCUniversal), defendants
maintain plaintiffs cannot invoke the discovery rule. They argue
the operative complaint “conclusively establish[ed]” that
plaintiffs “were aware, or reasonably should have been aware, of
the existence of [their] claims in 2012.” We are not persuaded.
       In NBCUniversal, the plaintiffs sued the defendants for
breach of an implied contract and breach of confidence for having
misappropriated and used the plaintiffs’ ideas for a reality
television show. (NBCUniversal Media, supra, 225 Cal.App.4th
at p. 1226.) The plaintiffs filed their complaint after the statutes
of limitation had expired. (Ibid.) Plaintiffs contended, however,
the discovery rule delayed accrual of their claims. They only
became aware the defendants had used their ideas after the
series had begun. (Id. at p. 1227.)
       NBCUniversal held the plaintiffs’ claims accrued on the
date of the disputed show’s first episode, and the plaintiffs failed
to plead sufficient facts showing they could not have discovered
their claims earlier despite reasonable diligence. (NBCUniversal,
supra, 225 Cal.App.4th at p. 1234.) There was no indication the

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defendants “fraudulently concealed the broadcast from them, or
that [the plaintiffs] lacked a meaningful ability to view it.” (Ibid.)
Further, “[t]he mere fact that [the plaintiffs] did not personally
view the program until sometime after the first broadcast is
irrelevant, as the discovery rule does not operate to delay accrual
of a cause of action ‘beyond the point at which their factual basis
became accessible to plaintiff to the same degree as it was
accessible to every other member of the public.’ ” (Ibid.)
NBCUniversal concluded a television show’s “public disclosure to
even a limited audience is sufficient to preclude a plaintiff from
arguing that the breach and injury were secretive and difficult to
detect.” (NBCUniversal, at p. 1235.)
       We conclude NBCUniversal is not controlling here. In that
case, the plaintiffs also “were on inquiry notice prior to the [first]
public broadcast of the [disputed] show. A plaintiff is on inquiry
notice when she ‘suspects or should suspect that her injury was
caused by wrongdoing, that someone has done something wrong
to her.’ ” (NBCUniversal, supra, 225 Cal.App.4th at p. 1236,
italics added.) NBCUniversal held the plaintiffs were put on
inquiry notice by an e-mail received from the defendants’
representative within the limitation period. This e-mail gave an
ambiguous description of an apparently similar show in
production. Although the e-mail aroused the plaintiffs’
suspicions, they never followed through with an investigation.
(Ibid.) Thus, apart from the show’s public disclosure, there was
also sufficient facts showing the plaintiff was on inquiry notice of
the defendant’s wrongdoing. In other words, the plaintiff cannot
benefit from the discovery rule by keeping his or her head in the
sand. (NBCUniversal, supra, 225 Cal.App.4th at pp.1227–1228.)

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       Unlike NBCUniversal—which was on summary
judgment—the operative complaint alleges no facts that plaintiffs
suspected or should have suspected Ball’s theft and sale of Gold
Divers’s development file before Morgan’s fortuitous discovery in
2018. Instead, the complaint alleges Ball, who was tasked with
developing the show, “misrepresented to Varuna that the project
was ‘dead’ and further misrepresented that the project could not
be revived because gold diving had been ‘shut down’ off the coast
of Alaska.” Ball then left Varuna without revealing he was
taking the development file with him. When the show was sold
to the Discovery Channel, it aired under a different name.4 The
operative complaint also alleges because plaintiffs had no reason
to suspect Ball before 2018, they did not take it upon themselves
to continuously “monitor the many thousands of consumer cable
television channels or the hundreds of thousands of cable
television shows on air at any given time on the many thousands
of available cable channels” for wrongdoing. (Cf. Shively v.
Bovanich (2003) 31 Cal.4th 1230, 1249 [applicability of discovery
rule in defamation case may turn on whether defamatory writing
“has been kept in a place to which the plaintiff has no access or
cause to seek access”]; and Hebrew Academy of San Francisco v.
Goldman (2007) 42 Cal.4th 883, 894 [application of the discovery
rule may depend on whether the defamatory writing was
“published in an inherently secretive manner”].)

     4 The parties dispute whether plaintiffs consistently
alleged Ball’s name was omitted from the producer credits of the
Discovery Channel show. Whether Ball was credited at any point
in the broadcast as producing the show has no bearing on our
analysis of the propriety of the demurrer.

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       Taking the allegations in the operative complaint as true,
plaintiffs have alleged sufficient facts to invoke the discovery rule
for their conversion and breach of contract causes of action to
survive demurrer.5
III. Fraud by Omission Claim
       The operative complaint alleges a cause of action by Bazzy
against Ball for fraud by omission in connection with the Stone
Circle transaction. The elements of fraud by omission are:
(1) misrepresentation by nondisclosure; (2) knowledge of falsity;
(3) intent to defraud (i.e., to induce reliance); (4) justifiable
reliance; and (5) resulting damage. (Lazar v. Superior Court
(1996) 12 Cal.4th 631, 638.) To plead fraud by omission, the
plaintiff must also plead that the defendant was under a duty to
disclose the allegedly omitted fact. (Lopez v. Nissan North
America, Inc. (2011) 201 Cal.App.4th 572, 596.)
       “Had Ball disclosed to Bazzy that Ball had taken Gold
Divers[’s development file] with the intention of profiting from it,
Bazzy would not have invested into Stone Circle.” Plaintiffs
allege Ball fraudulently induced Bazzy to invest in Stone Circle
by failing to reveal his prior theft and sale of Gold Divers. And,
had Bazzy known of Ball’s misdeeds, he would not have invested

      5 Because we conclude the conversion and breach of
contract causes of action are not time-barred under the discovery
rule, we need not address plaintiffs’ alternative equitable tolling
theory of fraudulent concealment. Further, the doctrine of
continuous accrual fails to support plaintiffs’ causes of action for
“conversion under the continuous accrual doctrine” and “breach of
contract under the continuous accrual doctrine” as a matter of
law. (NBCUniversal v. Superior Court, supra, 225 Cal.App.4th at
p. 1237, fn. 10.)

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in Stone Circle. These allegations fail to allege facts sufficient to
state a cause of action for fraudulent omission.
      As previously stated, Ball’s conversion and breach
purportedly occurred in 2012. The pleading also asserts that
after Ball approached him to invest, Bazzy signed an investment
agreement on January 1, 2012. Therefore, Ball’s solicitation of
Bazzy to invest must have occurred in 2011, prior to the
execution of their agreement and before Ball’s departure from
Varuna and wrongdoing. From the allegations in the operative
complaint, Ball did not “misrepresent by nondisclosure” his theft
and breach to fraudulently induce Bazzy to invest in Stone Circle.
The demurrer to the cause of action for fraud by omission was
properly sustained.

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                          DISPOSITION
      The judgment of dismissal as to the first cause of action for
conversion, the third cause of action for breach of contract, and
the related sixth cause of action for declaratory relief is reversed.
      The judgment of dismissal as to the second cause of action
for conversion under the continuous accrual doctrine, the fourth
cause of action for breach of contract under the continuous
accrual doctrine, and the fifth cause of action for fraudulent
omission is affirmed.
      The parties are to bear their own costs on appeal.
      NOT TO BE PUBLISHED.

                                            LUI, P. J.
We concur:

      CHAVEZ, J.

      HOFFSTADT, J.

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