Case Number: BC684340 Hearing Date: July 24, 2018 Dept: 78

Superior Court of California
County of Los Angeles
Department 61

SUSANNAH O’BRIEN, et al.,

Plaintiffs,

v.

JOHN RICHARD ROGERS., et al.,

Defendants.

Case No.: BC684340

Hearing Date: July 24, 2018

[TENTATIVE] RULING RE:

Defendant John Richard Rogers’s Motion to Compel Arbitration

Defendant John Richard Rogers’s Motion to Compel Arbitration is DENIED.

FACTUAL BACKGROUND

This is an action for breach of contract and fraud. The First Amended Complaint (“FAC”) alleges as follows. Plaintiff Susannah O’Brien is the CEO of Plaintiff Sahara Vision Productions, LLC (collectively referred to as “O’Brien”). (FAC ¶¶ 1–2.) In November 2014, O’Brien met with Defendant John Richard Rogers (“Rogers”), who represented himself as an agent of Defendant Hannover House, Inc. (“House”), to discuss a potential representation contract for O’Brien and a film that she had produced. (FAC ¶ 23.) Rogers represented that he would obtain a distribution deal with House, including theatrical and online distribution, if O’Brien advanced $13,000. (FAC ¶ 24.) O’Brien entered into a representation contract with Rogers and his company, XVIII Entertainment LLC (“XVIII”) in January 2015. (FAC ¶ 25.)

Defendant Eric Parkinson is the CEO of House. (FAC ¶ 10.) Defendant Don Fredrik Shefte (“Shefte”) is the COO/CFO of House. (FAC ¶ 13.) Parkinson sent emails to Rogers and O’Brien confirming the distribution deal in June 2015. (FAC ¶ 27.) O’Brien and Parkinson signed a memorandum of agreement in August 2015 including theatrical, digital, and video distribution rights, as well as marketing and advertising goals and budgeting. (FAC ¶ 27.) O’Brien then paid $10,000 for marketing and advertising the film in anticipation of a theatrical release. (FAC ¶ 27.)

O’Brien alleges that Defendants Crimson Forest Entertainment Group Inc., Crimson Forest Films LLC, and Crimson CEO and Managing Member Jonathan Lim, became licensees in privity with House regarding distribution of the film. (FAC ¶ 28.) Later, Crimson Inc. and House engaged in a stock-for-stock merger, making Crimson Inc. primarily responsible for House’s liabilities. (FAC ¶ 43.)

O’Brien alleges the following misconduct on the part of Defendants. Defendants wrongfully altered the poster and log line for her film, despite her contractual veto right for changes to either. (FAC ¶ 28.) House falsely represented to O’Brien that its goal was to obtain 80 to 100 theaters for distribution of the film, when in fact no theaters were booked for the premiere, and ultimately only ten theaters hosted the release. (FAC ¶¶ 29, 32–33.) Defendants unduly delayed releasing the film without good cause. (FAC ¶ 30.) The film never appeared on Fandango, a ticket-selling website. (FAC ¶ 33.) Defendants never obtained qualification to have the picture hosted on either Netflix’s or Amazon’s video-on-demand services. (FAC ¶¶ 34–35.) Defendants never informed O’Brien of the true and correct number of copies of the film released to Walmart locations, or of the release earnings from Walmart. (FAC ¶ 37.) Defendants repeatedly misrepresented the box office revenue of the picture. (FAC ¶ 38.) After O’Brien signed a second agreement for distribution of a second film, Defendants did not perform on that agreement either. (FAC ¶ 40.)

Procedural History

O’Brien filed the original Complaint on November 20, 2017.

Rogers filed the present Motion to Compel Arbitration on January 25, 2018 attaching the alleged Agreement between O’Brien and XVIII with no declaration establishing the authenticity of the document and no proof of service of the petition. On the same date, January 25, 2018, Rogers filed a notice of hearing on the petition stating the hearing would be on January 25. 2018. There was again no proof of service of this notice.

O’Brien filed the FAC on April 5, 2018, alleging 11 causes of action:

Breach of Contract

Breach of Implied Covenant of Good Faith and Fair Dealing

Breach of Fiduciary Duties

Conversion

Fraud and Fraudulent Misrepresentation

Unjust Enrichment

Intentional Misrepresentation

Negligent Misrepresentation

Fraudulent Concealment

Unfair Business Practices

Accounting

No opposition to the present Motion to Compel Arbitration has been filed.

DISCUSSION

MOTION TO COMPEL ARBITRATION

On petition of a party to an arbitration agreement to arbitrate a controversy, a court must order the petitioner and respondent to arbitrate the controversy if it determines the arbitration agreement exists, unless (1) the petitioner has waived its right to arbitrate; (2) grounds exist for the revocation of the agreement; or (3) “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (Code Civ. Proc., § 1281.2.)

“[T]he party moving to compel arbitration bears the burden of establishing the existence of a valid agreement to arbitrate between itself and the party against whom the petition was filed. (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

No opposition to the present motion has been filed but there is no evidence counsel for plaintiff ever received notice either that the petition had been filed or that a hearing had been set for today on the petition.

Rogers presents an agreement between O’Brien and XVIII requiring that “[a]ny dispute under this agreement . . . be resolved by final and binding arbitration under the Rules for International Arbitration of IFTA in effect when the arbitration is filed.” (Petition Exh. A.) To attempt to show that he has standing to bring the petition, Rogers re-invents the caption of the present action as be between O’Brien and “JOHN ROGERS, Managing Member, XVIII Entertainment LLC. In fact while Mr. Rogers is a defendant in the action the complaint and all subsequent filings make clear that he is being sued in his individual capacity and that XVIII is named separately in the complaint in its corporate capacity.

The first reason the petition is denied is that there is no proper party before the Court as a petitioner. While Mr. Rogers may appear on behalf of himself in propria persona, he cannot appear on behalf of the corporation, XVIII. XVIII must be represented by an attorney and the fact that Mr. Rogers is the “managing member” of XVIII does not change this fact. (See Merco Constr. Engineers, Inc. v. Municipal Court (1978) 21 Cal.3d 724, 731). And while Mr. Rogers can represent himself in this action, the fact is that he is not a party to the alleged agreement which contains the arbitration clause and therefore has no right to demand arbitration on his own behalf.

The second reason the petition is denied is closely related to the first. As the Court held in Birl v. Heritage Health Care (2009) 72 Cal. App. 4th 1313, a petition to compel arbitration may be properly denied where there is a risk that this order could result in the same issues being litigated (with potentially results) in the arbitration and the Court proceeding. Here virtually all of the allegations against XVIII are based on alleged misrepresentations made by Rogers and others. As noted, Mr. Rogers is not entitled to demand arbitration because he is not a party to the arbitration agreement. Granting the petition to compel arbitration would inevitably result in the same issues being litigated in the arbitration that will be litigated here between O’Brien, Mr. Rogers and other third parties who are not parties to the arbitration agreement.

The petition to compel arbitration is DENIED.

Defendant John Rogers is ordered to file his response to the First Amended Complaint within 20 days from the date of this order.

The Court will give notice.

Dated: July 24, 2018

__________________________________________

Hon. Robert S. Draper

Judge of the Superior Court