Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court for the County of Los Angeles No. BC315950, Haley J. Fromholz, Judge.
Law Offices of Randel L. Ledesma and Randel L. Ledesma; Matthew Fortado, pro hac vice, for Defendants and Appellants.
Sabrina LaBow, in propria persona; Shevin & Lentz and Jacek W. Lentz for Plaintiff and Respondent.
COOPER, P. J.
SUMMARY
Sabrina LaBow sued Rene Sheridan and Sheridan’s production company, The Red Diamond Company. LaBow alleged she and Sheridan were engaged in a joint venture for the development of projects in the entertainment industry. With respect to a project called Jailhouse Rock: The Musical, LaBow asserted they agreed to split the revenues generated by the project equally, and Sheridan breached the agreement by failing to do so. In special verdicts, the jury awarded LaBow $100,000 in damages on her joint venture/breach of fiduciary duty claim, but found no liability on her claims of promissory fraud and breach of contract. Sheridan appeals, contending LaBow did not prove the elements of a joint venture, the special verdicts were inconsistent, and the award of damages was improper. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
We recite the facts in the light most favorable to the judgment.
LaBow and Sheridan were introduced in 1998 through LaBow’s father, a wealthy businessman. Sheridan had been in the entertainment industry for 20 years, and had received production credit for one feature film. LaBow had graduated from UCLA in 1989, worked as general manager of the Laugh Factory for several years, and was interested in acting and producing. She wrote, directed, produced and acted in a short film called “Look Out Cindy Crawford,” and had accumulated a number of contacts in the entertainment industry. LaBow sent Sheridan a copy of her short film. Sheridan thought LaBow had done a great job on the film, and eventually Sheridan asked LaBow to work with her under the auspices of Sheridan’s production company, Red Diamond.
LaBow and Sheridan worked together from 1998 to 2003. LaBow resided and worked in her home in Los Angeles, and Sheridan maintained a home in Idaho as well as an office in Los Angeles. According to LaBow, they agreed they would work together to acquire, develop and produce film, television and stage projects. LaBow would contribute creative and other services, while Sheridan would be primarily responsible for business dealings; both of them would receive compensation, profit participation and a producer credit for any project they ultimately produced; and one or both of them would negotiate with the relevant third parties (such as financiers or distributors) the terms of the compensation and credit they would receive on any particular project.
Over the years, LaBow worked 40 to 60 hours a week. She introduced Sheridan to a number of her industry contacts. She reviewed and evaluated hundreds of screenplays, as well as treatments, log lines (short descriptions of screenplays), and books (scripts) for musicals. Many of these were unsolicited screenplays sent to Red Diamond which Sheridan asked LaBow to review, as Sheridan did not have the time or inclination to review unsolicited material. LaBow and Sheridan communicated frequently, by telephone and e-mail. LaBow marketed and pitched projects to industry contacts, including producers and financiers who were her own contacts or who were Sheridan’s contacts. LaBow’s correspondence, of which Sheridan received copies, included documentation of many marketing efforts, and sometimes referred to Sheridan as her partner. After they began to work together, Sheridan revised Red Diamond’s listing in the Hollywood Creative Directory – an industry publication listing production companies and their employees – to show LaBow as a co-producer. Sheridan admitted that she and LaBow submitted certain projects, as well as ideas for remakes of old movies, to contacts of LaBow’s, and anticipated that both would be compensated if the projects went forward.
At some point “toward the beginning” of their relationship, Sheridan told LaBow about a project, Jailhouse Rock: The Musical, for which she (Sheridan) had optioned the rights. The project was to be a live stage musical based on the 1957 Elvis Presley film. Sheridan had begun acquiring production rights in 1992, but had encountered many problems. Sheridan sought assistance from LaBow, and they had conversations about the project throughout the time they worked together. LaBow did “a lot of research for the project.” LaBow put together a list of Elvis Presley songs to be used in the musical, and Sheridan accepted LaBow’s selections. LaBow reviewed more than one of the proposed books for the musical, and gave Sheridan ideas relating to revisions; her input was accepted by Sheridan and in one case resulted in Sheridan’s rejection of one of the books. LaBow prepared notes (creative comments) on the project and provided them to Sheridan. Sheridan asked LaBow for publicity and other contacts in order to promote Jailhouse Rock. LaBow’s research included possible venues for the show in Las Vegas and Japan, and LaBow and Sheridan planned to talk to resort executives at two Las Vegas locations about staging the show there. They made plans to go to London together to assess venues, and discussed merchandising ideas. LaBow also made contacts for the purpose of obtaining financing for the show.
According to LaBow, after she had worked on the Jailhouse Rock project for a few years, she and Sheridan agreed that they would split the revenues they received from the musical 50-50. They discussed the various aspects of the show, and believed that most of the revenues would come from merchandising. They also discussed territories for the project, and decided they would keep the rights to the show in Las Vegas and Japan for themselves. They discussed expenses that Sheridan expected to incur in connection with setting up the production, and agreed that Sheridan would be responsible for the expenses. Sheridan told LaBow that she expected the show to be a huge hit, such that the expenses “were not all that important,” and that she (Sheridan) would be able to write off the expenses. LaBow’s testimony was confirmed by a friend, Perris Knight, who lived at LaBow’s home for several months in 2003. Knight overheard speakerphone conversations between Sheridan and LaBow discussing Jailhouse Rock, in which Sheridan told LaBow that the two of them were “splitting” and “we’re going to be two wealthy women.” When LaBow expressed concern, after several years of work with no projects coming to fruition, and hence no income, Sheridan reassured her, with regard to Jailhouse Rock and one other project, that “they were going to be huge hits, and that [LaBow] wouldn’t have to worry about money every again basically.”
As it happened, however, in the late summer or early fall of 2003, while LaBow was still working on merchandising ideas for Jailhouse Rock, Sheridan stopped communicating with LaBow. Sheridan had, unbeknownst to LaBow, negotiated a separate deal, beginning in the last quarter of 2002 and culminating in a signed contract in May 2003, for the production of Jailhouse Rock in London. The musical ran for about a year in London, and then closed. Sheridan received $350,000 in reimbursement for development costs, which she testified was less than she spent in putting the deal together. LaBow got nothing, and filed this lawsuit.
The case was tried to a jury. LaBow contended the two women had (1) a general agreement to work together to develop and exploit entertainment projects, with terms of compensation, profit participation and the like to be negotiated depending on the nature of the project, third party participation, and other factors, and (2) as to Jailhouse Rock: The Musical, an agreement to split equally the revenues generated by the project and paid to either of them. Sheridan’s version of events was that she did not enter into a joint venture with LaBow when they met in 1998, and never had any understanding with LaBow that they would work together to try to get projects produced. Sheridan said the only circumstance in which LaBow would participate in any revenues generated by any project would be if LaBow brought in financing for the project. According to Sheridan, LaBow “wasn’t involved in Jailhouse Rock”; she never promised LaBow 50 percent of the revenues generated from Jailhouse Rock; and she merely gave LaBow the opportunity to invest $50,000 and receive a pro rata share (and an associate producer credit) along with other investors.
After several days of trial, the matter was submitted to the jury on LaBow’s claims of joint venture and breach of fiduciary duty, promissory fraud, and breach of oral contracts. The jury was given three special verdict forms, and was instructed to decide the individual verdicts in whatever order it wished. The jury found:
1. LaBow and Sheridan combined their property, skill or knowledge to carry out a single business undertaking; they agreed to share control, profits and losses; Sheridan failed to do something she was required to do in connection with the joint venture and LaBow was harmed by that failure; Sheridan failed to treat LaBow with the highest loyalty and utmost good faith, and LaBow was harmed by that failure; and LaBow’s damages (past economic loss including lost earnings and the detriment experienced by LaBow) were $100,000.
2. Sheridan made a promise to LaBow that was important to the transaction, but she intended to perform the promise when she made it.
3. The oral contract terms were not “clear enough so that the parties could understand what each was required to do.”
4. Sheridan was not guilty of malice, oppression or fraud sufficient to justify an award of punitive damages.
Judgment was entered and Sheridan filed a timely appeal.
DISCUSSION
Sheridan presents several arguments for reversing the judgment. None has merit.
First, Sheridan contends the evidence, as a matter of law, did not show a joint venture, because it did now show LaBow participated in the management and control of the enterprise. The jury thought otherwise, and no legal basis exists for rejecting its conclusion.
A joint venture exists “‘where there is an “agreement between the parties under which they have a community of interest, that is, a joint interest, in a common business undertaking, an understanding as to the sharing of profits and losses, and a right of joint control.” [Citations.]’” (Kaljian v. Menezes (1995) 36 Cal.App.4th 573, 586.) The right of joint control is an essential element of a joint venture. (Ibid.) The existence vel non of a joint venture “is a fact question for resolution by the jury.” (Ibid.)
Sheridan complains there could be no joint venture because LaBow had no voice in the management and control of the Jailhouse Company (a company Sheridan formed to acquire rights to produce the musical), and because LaBow admitted that Sheridan was “primarily responsible for the business dealings.” But the joint venture was not with the Jailhouse Company; it was with Sheridan and her production company, Red Diamond (which Sheridan stipulated was her alter ego). And Sheridan’s responsibility for business dealings is irrelevant to the issue of shared control. It is not uncommon for joint venturers to contribute to the venture in accordance with their skills, and LaBow testified she was “more responsible for the creative aspects” while Sheridan was in charge of the business dealings. This division of labor does not, as a matter of law, constitute a lack of the element of joint control inherent in a joint venture. (See Oakley v. Rosen (1946) 76 Cal.App.2d 310, 313-314 [“[t]he fact that appellee was to produce the play without the assistance of appellants makes it nonetheless a joint venture. Many successful enterprises owe their pronounced achievements to the program and direction of a single mind”].) Moreover – and as the trial court instructed, without objection – the parties to a joint venture need not agree that they will share control of the venture equally. In short, the question whether joint control existed was for the jury, which found in the affirmative.
Sheridan also suggests that LaBow’s admitted lack of responsibility for any losses of Jailhouse Rock necessarily means there was no joint venture. But the parties are at liberty to agree on how to share the profits and losses of their enterprise. Moreover, LaBow contributed her services to the enterprise without compensation for several years, so it can hardly be said that she did not share in the risks of the enterprise. “While in a technical joint venture there is usually a sharing of profits and losses in the prosecution of the common enterprise [citations], the mode of participating in the fruits of the undertaking may be left to the agreement of the parties.” (Universal Sales Corp. v. California etc. Mfg. Co. (1942) 20 Cal.2d 751, 764 (Universal Sales).) Again, we cannot conclude, as a matter of law, that no joint venture existed.
In her reply brief, Sheridan cites Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 637-638, claiming it stands for the proposition that, “[i]n order to constitute a joint venture, the parties must agree to ‘share the risks as well as the profits of the business.’” But Oakland Raiders adds nothing new to the law of joint ventures, and does not stand for the proposition that joint venturers must agree to share risk or losses in any particular way. The issue in Oakland Raiders was whether the NFL had a fiduciary duty to a member club. (131 Cal.App.4th at p. 634.) The court merely rejected (among several other theories) the Raiders “intimation” that a fiduciary relationship existed based on an alleged joint venture. The court quoted the usual definition of a joint venture, and observed “there is no sharing of profits and losses by member clubs indicative of a joint venture.” (Id. at pp. 637-638.) The court also quoted a footnote in a federal district court antitrust case, in which the district court observed that NFL clubs share revenues, but do not share profits and losses. (Oakland Raiders, supra, 131 Cal.App.4th at p. 638, quoting Los Angeles Memorial Coliseum v. N.F.L. (1979) 468 F.Supp. 154, 162, fn. 9.) The case says nothing inconsistent with the Universal Sales principle that the mode of participating in the fruits of an enterprise may be left to the agreement of the parties. (Universal Sales, supra, 20 Cal.2d at p. 764.)
Sheridan’s second contention is that the jury’s special verdict was inconsistent on its face. The claimed inconsistency is between the jury’s finding, on the breach of contract claim, that the oral contract terms were not clear enough so that the parties could understand what each was required to do, and the jury’s award of damages on LaBow’s joint venture claim. Sheridan says the jury’s finding on the breach of contract claim “applies with full force to [LaBow’s] joint venture claim.” Sheridan proffers no reason why this should be so, and it is not so.
As the court’s instructions show, LaBow made two different claims for breach of oral contracts. One claim was for breach of the parties’ general agreement “to work together to try to produce or otherwise exploit entertainment industry projects,” and the other was for breach of a specific agreement to split revenues from Jailhouse Rock. As for the general agreement, LaBow testified the details with respect to any particular project “would depend on each project,” including such factors as the third parties who might be involved, whether Sheridan or LaBow brought the necessary industry contacts to the transaction, and so on. “That kind of thing would be more thoroughly discussed once the project looked to be made.”
The jury determined LaBow’s joint venture and breach of fiduciary duty claim first, and specifically found that the elements of a joint venture agreement existed and that LaBow was damaged by Sheridan’s breach. The jury then went on to find, on the breach of contract claim, that the oral contract terms were not clear. That finding is perfectly consistent with the evidence on LaBow’s claim of a general agreement under which Sheridan and LaBow would work together to exploit entertainment projects, and would agree on specific terms once the project “looked to be made.” Since no projects other than Jailhouse Rock reached such a stage, it is not surprising the jury concluded that the oral contract terms were not “clear enough so that the parties could understand what each was required to do.” That finding clearly does not “appl[y] with full force” – or at all – to the jury’s previous, specific findings on the parties’ joint venture agreement. There is nothing inconsistent in the jury’s special verdicts.
Finally, Sheridan complains about the award of damages. She contends there was no evidence consistent with an award of $100,000; LaBow “failed in her burden to prove the amount of her damages”; and the award was “speculative.” We disagree. The jury was correctly instructed to decide, in the event LaBow proved her breach of fiduciary duty claim, how much money would reasonably compensate LaBow for the harm caused by Sheridan’s wrongful conduct. LaBow argued she was harmed in the amount of $175,000 (one-half of the $350,000 which the evidence showed Sheridan received from Jailhouse Rock). LaBow also argued she was entitled to one-half of any future revenues generated by Jailhouse Rock. The jury found damages consisting of past economic loss of $100,000, and awarded nothing for future economic loss. Clearly there was evidence supporting the award. While the amount was less than the jury might have awarded, we know of no reasoned basis for overturning an award, at the instance of the litigant against whom it was made, merely because it is less than the amount supported by the evidence. Moreover, if Sheridan believed the damages were excessive, her remedy was to move for a new trial. (Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 122 [“failure to move for a new trial ordinarily precludes a party from complaining on appeal that the damages awarded were either excessive or inadequate, whether the case was tried by a jury or a court without a jury”].) While a party is not precluded “from urging legal errors in the trial of the damage issue such as erroneous rulings on admissibility of evidence, errors in jury instructions, or failure to apply the proper legal measure of damages” (ibid.), there were no such legal errors in this case.
DISPOSITION
The judgment is affirmed. Sabrina LaBow is to recover her costs on appeal.
We concur: FLIER, J., EGERTON, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.