PageMasters, Inc. v. Autodesk, Inc., No. 2:2008cv00553 - Document 22 (D. Ariz. 2009)
Court Description: ORDER granting Dft Autodesk Inc's 10 Motion to Dismiss PageMaster's Complaint and the complaint is dismissed with prejudice. The Clerk of Court is directed to enter JUDGMENT in favor of dft Autodesk, Inc. and to terminate the case. Signed by Judge Robert C Broomfield on 3/30/2009. (LAD)
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PageMasters, Inc. v. Autodesk, Inc. 1 Doc. 22 WO 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE DISTRICT OF ARIZONA 9 10 11 12 PageMasters, Inc., 13 14 15 16 Plaintiff, vs. Autodesk, Inc., Defendant. ) ) ) ) ) ) ) ) ) ) No. CV-08-00553-PHX-RCB O R D E R 17 18 This lawsuit is the latest attempt by plaintiff PageMasters, 19 Inc. to obtain “several million dollars” in royalty payments which 20 it believes Océ-Technologies, B.V. (“Océ”), its former licensee and 21 a non-party, owes it. 22 obligation is based upon a Software Distribution Agreement entered 23 into more than a decade ago, in 1997, between PageMasters and Océ 24 (“Océ Agreement”). 25 to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) by defendant, 26 Autodesk, Inc. (doc. 10). 27 the history of this litigation having presided over not one, but See Co. (doc. 1) at 3, ¶ 10. That purported Currently pending before the court is a motion The court is intimately familiarity with 28 Dockets.Justia.com 1 two, prior closely related lawsuits.1 2 v. PageMasters, Inc., No. CIV 04-0557-PHX-RCB (“PageMasters I”); 3 and PageMasters, Inc. v. Océ-Technologies, B.V., No. CIV 05-1519- 4 PHX RCB (“PageMasters II”). 5 straightforward issues which Autodesk’s motion raises, oral 6 argument will not assist the court. 7 the parties’ requests for oral argument. 8 Bureau of Placer County, Inc., 171 F.3d 1197, 1200 (9th Cir. 1999). 9 Background 10 11 I. See Océ-Technologies, B.V. Given that familiarity, and the Therefore, the court denies See Mahon v. Credit Scope of Record Before outlining the facts, the court must decide which 12 documents it may properly consider on this motion to dismiss. 13 Ordinarily in ruling on a Rule 12(b)(6) motion, such as Autodesk’s, 14 a court may not consider matters beyond the complaint. 15 v. Caterpillar, Inc., 503 F.3d 974, 979-980 (9th Cir. 2007) 16 (internal quotation marks and citation omitted)(“In general, the 17 focus of any Rule 12(b)(6) dismissal . . . is the complaint.”) In 18 the present case, however, both parties are relying upon documents 19 other than the complaint. 20 whether it may properly consider any of those documents without 21 converting this motion into one for summary judgment. 22 City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (internal 23 quotation marks and citation omitted) (“[A] court may consider 24 material which is properly submitted as part of the complaint on a 25 motion to dismiss without converting th[at] motion . . . into a See Corrie The court must therefore determine See Lee v. 26 1 27 28 Indeed, this court’s “familiarity with the transaction and the arguments raised in [the] instant case,” was the primary reason for transferring the present action from the Honorable Neil V. Wake to this court. Order (doc. 21) at 5:16-17. -2- 1 2 3 motion for summary judgment.”) 1. Incorporation by Reference Both parties heavily rely upon the Océ Agreement and the March 4 2000 Asset Purchase Agreement (“APA”) between PageMasters and 5 Buzzsaw.2 6 PageMasters’ claims herein, and although the complaint mentions 7 both, neither is attached thereto. 8 that Autodesk is requesting the court to take judicial notice of a 9 number of documents, that request does not include these two Unquestionably those two agreements form the basis for Additionally, despite the fact 10 agreements.3 11 doctrine permits, the court will consider the Océ Agreement and the 12 APA on this motion to dismiss. 13 908 (9th Cir. 2003) (citations omitted) (“Even if a document is not 14 attached to a complaint, it may be incorporated by reference into a 15 complaint if the plaintiff refers extensively to the document or 16 the document forms the basis of the plaintiff’s claim.”); see also 17 Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (internal 18 quotation marks and citations omitted) (incorporation by reference 19 doctrine allows for consideration of “documents whose contents are 20 alleged in a complaint and whose authenticity no party questions, 21 but which are not physically attached to the [plaintiff’s] 22 pleading[]”). Nonetheless, as the incorporation by reference See U.S. v. Ritchie, 342 F.3d 903, Likewise, the court will “treat such a document[s] 23 24 25 26 27 28 2 After the closing of that APA, Buzzsaw “merged into Autodesk[.]” Co. (doc. 1) at 2, ¶ 8. Thus, Autodesk is the successor-in-interest to Buzzsaw. To simplify matters, both companies will be referred to throughout as Autodesk. 3 Autodesk did attach those two agreements to its RJN as exhibit A and B respectively, but specifically limited its request for judicial notice to exhibits C-O thereto. RJN (doc. 11), at 2:2-3. Autodesk correctly implies, however, as discussed above, that the court may properly consider those two agreements based upon the incorporation by reference doctrine. See Mot. (doc. 10) at 3, n. 2. -3- 1 as part of the complaint, and . . . assume that [their] contents 2 are true for purposes of [this] motion to dismiss under Rule 3 12(b)(6).” 4 (internal quotation marks and citation omitted). See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) 5 2. 6 Because the 13 filings from PageMasters’ related lawsuits and Request for Judicial Notice 7 arbitration are a matter of public record, Autodesk contends that 8 the court can properly take judicial notice of their “existence[.]” 9 Autodesk’s Request for Judicial Notice (“RJN”) (doc. 11) at 2-3. 10 The court may also take judicial notice of “certain arguments and 11 statements made” in those filings, according to Autodesk, because 12 they are “readily verifiable . . . and their existence cannot be 13 subject to any dispute because they were made by a party to the 14 current action in a prior related lawsuit.” 15 3:19-21. 16 Perhaps because it, too, is relying upon some of those prior 17 filings.4 18 Id. at 3:1-2; and Tellingly, PageMasters did not respond to this RJN. Pursuant to Fed. R. Evid. 201, a court may “take judicial 19 notice of matters of public record and consider them without 20 converting a Rule 12 motion into one for summary judgment.” 21 v. 14.02 Acres of Land, 530 F.3d 883, 894 (9th Cir. 2008) (internal 22 quotation marks and citation omitted). 23 other actions are matters of public record, and hence properly the 24 subject of judicial notice. 25 Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir. 2006) (taking U.S. Pleadings and orders in See, e.g., Reyn’s Pasta Bella, LLC v. 26 27 28 4 PageMasters goes so far as to “incorporate” into its Response this court’s “Undisputed Facts” as set forth in PageMasters II, 2006 WL 753164 (RJN (doc. 11), exh. K thereto). See Pl. Resp. (doc. 17) at 2. -4- 1 judicial notice, as a matter of public record, “pleadings, 2 memoranda, expert reports, etc., from [earlier] litigation[,]” 3 which were thus “readily verifiable”); Kourtis v. Cameron, 419 F.3d 4 989, 994 n.2 (9th Cir. 2005) (citation omitted) (“court records 5 from related proceedings can be taken into account without 6 converting a motion to dismiss into a summary judgment motion[]”), 7 overruled on other grounds, Taylor v. Sturgell, ___ U.S. ___, 128 8 S.Ct. 2161, 171 L.Ed.2d 155 (2008). 9 By its silence, and the fact that it is also relying in part 10 upon those prior court filings, the court assumes that PageMasters 11 is not opposing Autodesk’s RJN. 12 Autodesk’s RJN as to exhibits C-O attached thereto and will 13 consider those exhibits to the extent necessary to resolve this 14 motion, as well as the Océ Agreement and the APA. 15 taking judicial notice of those prior filings to show, for example, 16 that a prior proceeding occurred or that a certain argument or 17 position was asserted therein. 18 Unified School District, 2008 WL 820682, at *2 n. 3 (N.D.Cal. March 19 26, 2008) (taking judicial notice of pleadings to “see what 20 arguments Defendants advanced in” another court and what court 21 ruled); Mitchell v. Branham, 2008 WL 3200666, at *8 (S.D.Cal. Aug. 22 5, 2008) (“[d]ocuments that are part of the public record may be 23 judicially noticed to show . . . that a judicial proceeding 24 occurred or that a document was filed in another court case[]”). 25 Autodesk is not requesting that the court take judicial notice of 26 factual findings made by other courts or the arbitrator, Mot. (Doc. 27 10) at 1, n.1; and indeed, the court could not do that. 28 Mitchell, 2008 WL 3200666, at *8 (citations omitted) (“[A] court Accordingly, the court grants It is only See, e.g., Faurie v. Berkeley -5- See 1 may not take judicial notice of findings of facts from another 2 case.”) 3 Agreement and the APA without converting this motion to one for 4 summary judgment. 5 at *3 (D.Idaho Feb. 26, 2009) (citation omitted) (“A court may look 6 beyond the complaint to matters of public record, and doing so does 7 not convert a motion for . . . dismissal into a motion for summary 8 judgment.”) 9 10 3. The court may consider the prior court filings, the Océ See Nunez v. Idaho Atty. Gen., 2009 WL 484431, PageMasters’ Documents PageMasters also relies upon documents beyond the complaint; 11 but, it does not request that the court take judicial notice of any 12 of those documents. 13 relying upon a September 12, 2007, letter from PageMasters to 14 Autodesk to establish that in its view that is the accrual date of 15 its breach of contract claim against Autodesk. 16 PageMasters informs Autodesk of this court’s September 11, 2007, 17 decision denying the former’s motion for post-judgment relief. 18 Resp. (doc. 17), exh. B thereto. 19 “whether Autodesk will demand an audit of Oce[.]” Id. 20 also attaches to its Response the December 11, 2006, affidavit of 21 its attorney, which is exhibit M to Autodesk’s RJN. 22 RJN, however, PageMasters includes the five exhibits to that 23 affidavit, including communications between PageMasters and 24 Autodesk pertaining to the former’s request that Autodesk demand an 25 audit of Océ. 26 Perhaps most significantly, PageMasters is In that letter, See PageMasters then inquires as to PageMasters Unlike the Autodesk objects to what it views as this impermissible 27 expansion of the record. 28 complaint does not include allegations of these purported Autodesk accurately points out that the -6- 1 communications between it and PageMasters as to an audit demand. 2 Autodesk further asserts, with no explanation, that these 3 communications are not proper matters for judicial notice, even if 4 PageMasters had made such a request. 5 The court is well aware that Fed. R. Evid. 201(c) allows it 6 “to take judicial notice whether requested or not.” 7 are subject to judicial notice, however. 8 “either (1) generally known within the . . . jurisdiction of the 9 trial court or (2) capable of accurate and ready determination by 10 resort to sources whose accuracy cannot reasonably be questioned” 11 are properly subject to judicial notice. 12 Except for the court filings which PageMasters attaches to its 13 response (including the McKee affidavit of which judicial notice 14 has already been taken), none of the other matters are the “kinds 15 of facts” which may be judicially noticed. 16 the court were so inclined, it could not take judicial notice of 17 the correspondence between PageMasters and Autodesk pertaining to 18 the audit demand. 19 and in light of the foregoing, the facts set forth below are drawn 20 primarily from documents referenced in the complaint or prior court 21 filings of which the court has taken judicial notice. 22 II. 23 Not all facts Only those which are Fed. R. Evid. 201(b). See id. Thus, even if Given the scant allegations in the complaint, Factual & Procedural History Essentially this litigation began with PageMasters’ 2003 24 demand upon Océ for an arbitration. 25 PageMasters I and PageMasters II. So, this is the third lawsuit 26 arising out of the Océ Agreement. Assuming familiarity with those 27 prior proceedings, there is no need to repeat the entire protracted 28 history of this litigation. Two lawsuits followed -- Some aspects of that history bear -7- 1 repeating, though, because they directly pertain to the narrow 2 issues which Autodesk’s motion raises. 3 Basically the Océ Agreement granted Océ an exclusive right to 4 license PageMasters’ software. 5 Under the terms of that Agreement, Océ agreed to pay PageMasters 6 royalties for copies of the software which Océ shipped. 7 A thereto at §§ 5.4 and 5.6. 8 been at the center of this dispute for years - the audit provision. 9 The Agreement required Océ RJN (doc. 11), exh. A thereto. Id., exh. One provision of that Agreement has to “maintain a complete, clear and 10 accurate record of the number of copies of the Software [which it] 11 shipped[.]” 12 right - upon 10 . . . days prior written notice - to have an 13 inspection and audit of all such records of Océ conducted by an 14 independent audit firm reasonably acceptable to both parties[.]” 15 Id. 16 Id. at ¶ 5.6. Correspondingly, PageMasters had “the Roughly three years later, in March 2000, PageMasters entered 17 into the APA with Autodesk. 18 receivables [sic] for sales that occurred prior to closing [i.e., 19 March 21, 2000], . . . remain[ed] the property of [PageMasters].” 20 RJN (doc. 11), exh. B thereto at 14 (Schedule G). 21 receivables for sales that occurred prior to the closing, . . . 22 also remain[ed] the property of [PageMasters] including monies due 23 from Oce.” 24 Autodesk, Autodesk “assume[d] all responsibilities under th[at] 25 . . . Agreement as of the Closing.” 26 § 5.16. 27 28 Id. That APA mandated that “[a]ll accounts “All unbilled In assigning the rights of the Océ Agreement to Id., exh. B thereto at 20, As with the audit provision in the Océ Agreement, one provision of the APA -- the so-called single audit provision -- has -8- 1 been hotly disputed in the prior actions, and continues to be here. 2 That provision states in relevant part: 3 [Autodesk] will provide reasonable assistance to [PageMasters] to assist [PageMasters] in conducting a single audit of Océ’s financial records (as permitted under the Océ Agreement) to verify amounts due and paid by Océ to [PageMasters] prior to the Closing, and will pay [PageMasters] the Net Revenues actually recovered pursuant to such audit. 4 5 6 7 Id. 8 A. 9 In approximately “October 2000, PageMasters notified Oce that PageMasters I 10 it was exercising its right to conduct an audit of its books and 11 records.” 12 (doc. 11), exh. I thereto at 7, ¶ 26. 13 scope of that audit and eventually, in 2003, PageMasters commenced 14 an arbitration proceeding against Océ. 15 10, ¶¶ 27-39. 16 arbitration, on November 26, 2003, inter alia, PageMasters filed a 17 cross-motion seeking “leave to . . . join Autodesk . . . as an 18 indispensable party.” 19 argued that “to the extent [that] the Arbitrator finds that the 20 provisions of the [APA], required . . . Autodesk . . . to 21 affirmatively pursue PageMasters’ claims (the right to perform an 22 audit and receive payment of accounts receivable existing prior to 23 the [APA]),” it should be granted “leave to join Autodesk as an 24 indispensable party to the arbitration.” 25 10-11. 26 thereto at 5, ¶ 19. 27 cross-motion. 28 RJN (doc. 11), exh. J thereto at 3, ¶ 16; see also RJN A dispute arose as to the Id., exh. I thereto at 7- In response to Océ’s motion to dismiss that Id., exh. O thereto at 10. PageMasters Id., exh. O thereto at The arbitrator denied Océ’s motion to dismiss. Id., exh. D The record is silent as to the outcome of that Océ then commenced an action in this court seeking to enjoin -9- 1 PageMasters from pursuing the arbitration. 2 PageMasters took the position that under the APA it “did not 3 transfer and assign to [Autodesk] its right to conduct an audit of 4 Océ’s books and records” under the Océ Agreement. 5 11), exh. D thereto at 2, ¶ 3. 6 its “understanding that, under [the single-audit provision] of the 7 [APA] . . . , it remained entitled to demand an audit of Oce under 8 the [Océ] Agreement.” 9 omitted). During PageMasters I, See RJN (doc. Similarly, Pagemasters’ indicated Id., exh. D thereto at 7, ¶ 28 (citation PageMasters based its “understanding” on the declaration 10 of Jayson Jones, one of its “shareholder[s]” and “officer[s][.]” 11 Id., exh. E thereto at 1, ¶ 1. 12 Based upon his “personal knowledge” acquired through “active[] 13 participat[ion]” in negotiati[ng]” both the Océ Agreement and the 14 APA, Mr. Jones declared that “[b]ased on the language in [the 15 single-audit provision] of the [APA], [he] understood that 16 PageMasters continued to have the right to demand an audit of Oce’s 17 books and records under the [Océ] Agreement.” 18 at 1, ¶¶ 1-3; and 5. 19 “understood and intended that, if Oce failed or refused to allow 20 PageMasters to properly audit its books and records, PageMasters 21 was permitted to pursue its rights and remedies under the [Océ] 22 Agreement with [Autodesk].” 23 that time Mr. Jones frankly declared that “[o]n behalf of 24 PageMasters, [he] did not intend that . . . Autodesk, would be 25 burdened with pursuing Oce to recover on any of PageMasters’ rights 26 and claims that existed at the time of the [APA].” 27 thereto at 2, ¶ 8. 28 “did not want . . . Autodesk to pursue PageMasters’ rights, Id., exh. E thereto Mr. Jones further declared that he Id., exh. E thereto at 2, ¶ 7. At Id., exh. E With further candor, Mr. Jones stated that he - 10 - 1 because” it did not have “the business information and financial 2 motivation to vigorously pursue claims solely for PageMasters’ 3 benefit.” 4 judgment motion in PageMasters I incorporated this view. 5 exh. C thereto at 12 (“It would be illogical for the parties to 6 contemplate that [Autodesk] would be burdened with pursuing 7 PageMasters’ right that existed under the Oce Agreement prior to 8 the closing of the [APA].”) 9 Id. In essence, PageMasters’ response to Océ’ summary See id., Furthermore, in PageMasters I, PageMasters reiterated its 10 position that PageMasters was an “indispensable party to the 11 Arbitration[.]” Id., exh. C thereto at 16 and 17. 12 APA did “not state that PageMasters retained a right to pursue 13 arbitration against Océ[,]” on October 25, 2004, this court granted 14 Océ’s summary judgment motion. 15 at 13:23-24. 16 Autodesk in the arbitration. 17 Likewise, although PageMasters discussed the issue of its audit 18 right in PageMasters I, the court explicitly declined to rule on 19 that issue because it was “not currently before th[e] Court.” 20 exh. F thereto at 5: n 4. Finding that the Id., exh. F thereto at 7:23-25; and The court also denied PageMasters leave to join Id., exh. F thereto at 13:2-3. Id., 21 B. 22 Trying a new tactic, a week after the entry of that order, on Pagemasters II 23 November 1, 2004, PageMasters filed suit against Océ in Maricopa 24 County Superior Court, State of Arizona. 25 PageMasters sought to compel an audit pursuant to the terms of the 26 Océ Agreement. 27 that action. 28 Id., exh. G thereto. PageMasters did not name Autodesk as a party to After removal to this court, on cross-motions for summary - 11 - 1 judgment, PageMasters again took the position that under the APA it 2 “did not transfer and assign to [Autodesk]. . . its right to 3 conduct an audit of Oce’s books and records[.]” Id., exh. I thereto 4 at 4, ¶ 12. 5 the APA, it had “negotiated for a continuing right to audit Oce’s 6 books and records.” 7 omitted). 8 9 PageMasters continued to adhere to its view that under Id., exh. I thereto at 7, ¶ 22 (citation On March 23, 2006, this court granted Océ’s motion for summary judgment. The court found that the APA did “not state that 10 PageMasters retained the right to independently pursue . . . an 11 audit[]” under the single-audit provision. 12 9:1-2. 13 specifically declares that [Autodesk] will provide reasonable 14 assistance to PageMasters to assist PageMasters in conducting the 15 audit[.]” Id., exh. K thereto at 9:2-5 (emphasis added). 16 according to the court, “the plain language of the [APA] indicates 17 that the parties intended to transfer to [Autodesk] all rights and 18 responsibilities pertaining to the [Océ] Agreement, including the 19 right to conduct the ‘single’ audit to collect any remaining 20 royalty payments due to PageMasters.” 21 10. 22 clause contained within section 5.16 is merely an agreement between 23 PageMasters and [Autodesk] that requires [Autodesk] to allow and 24 assist such an audit, and deliver to PageMasters any royalties it 25 discovers through such an audit.” 26 (emphasis added). 27 [Autodesk] would have the right to conduct the audit of Océ[,]” the 28 court concluded that “[a]n independent right to audit Océ was not Id., exh. K thereto at “Instead,” the court found that the APA “language Further, Id., exh. K thereto at 9:6- In so holding, the court explained that “[t]he ‘single’ audit Id., exh. K thereto at 9:10-14 Finding “that the parties contemplated that only - 12 - 1 expressly retained for PageMasters within the contract.” 2 K thereto at 9:21-24. 3 request for leave to join [Autodesk][.]” 4 11:15-17. 5 Id., exh. Finally, the court denied PageMasters’ Id., exh. K thereto at Nine months later, PageMasters moved for relief from judgment 6 of that March 23, 2006 order. 7 that motion was Océ’s supposed “fail[ure] to disclose the fact that 8 it had entered into an agreement with Autodesk . . . , to acquire 9 the right and interests under” the Océ Agreement. Id., exh. L thereto. The basis for Id., exh. L 10 thereto at 1. 11 finding, inter alia, that in the exercise of due diligence, 12 PageMasters could have discovered the Autodesk-Océ Agreement. 13 exh. O thereto at 7-9. On September 11, 2007, the court denied that motion, 14 C. 15 On March 20, 2008, PageMasters filed the present action. Id., Pagemasters III In a 16 sparse complaint, with no mention of the preceding four years of 17 litigation in this court, PageMasters alleges that it “has demanded 18 that Autodesk perform its responsibilities under the [APA] . . . to 19 demand an audit of Oce’s financial records[,]” and to pay 20 PageMasters what it believes is “several million dollars” owed to 21 it by Océ. 22 from the complaint are any allegations as to the time frame of that 23 demand. 24 alleges that “Autodesk has refused to perform its responsibilities 25 under, and therefore . . . is in breach of, the [APA].” 26 ¶ 11. 27 “required . . . to demand and perform an audit of Oce’s financial 28 records and turn over to PageMasters the net revenues from accounts Co. (doc. 1) at 3, ¶¶ 9 and 10. Conspicuously lacking Again with no mention of time frame, PageMasters baldly Id. at 3, PageMasters is seeking a declaration that Autodesk is - 13 - 1 receivable due and owing by Oce to PageMasters[.]” Id. at 3, ¶ (A). 2 PageMasters also seeks an award of “appropriate damages[.]” Id. at 3 3, ¶ (B). 4 Discussion 5 Autodesk filed the present pre-answer motion asserting three 6 independent grounds for dismissal. 7 barred by the statute of limitations. Second, the equitable 8 doctrine of laches bars those claims. Third, even if neither of 9 those defenses are availing, Autodesk maintains that it is entitled First, plaintiffs’ claims are 10 to dismissal for failure to state a claim because it has no 11 obligation under the APA to “demand and perform” an audit. 12 obligation thereunder is limited to providing reasonable assistance 13 with the audit. Its 14 The court will address the statute of limitations argument 15 first because if Autodesk prevails on that argument, it renders 16 moot the other two dismissal arguments. 17 I. 18 Statute of Limitations “If the expiration of the applicable statute of limitations 19 is apparent from the face of the complaint,” it is well settled 20 that “the defendant may raise [that] defense in a Rule 12(b)(6) 21 motion to dismiss.” 22 542 F.Supp.2d 1037, 1050 (N.D.Cal. 2008) (citing Jablon v. Dean 23 Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980)). 24 case, however, the complaint does not include any allegations 25 whatsoever as to time. 26 from the face thereof the timeliness of this action. 27 Autodesk properly resorted to the judicially noticed matters 28 previously discussed, in an effort to show its entitlement to See In re Juniper Networks, Inc. Sec. Litig., In the present It is, therefore, impossible to ascertain - 14 - Thus, 1 dismissal on statute of limitations grounds. 2 2008 WL 3289481 at *3 (E.D.Cal. Aug. 6, 2008) (internal quotation 3 marks and citation omitted) (taking judicial notice “of the fact 4 and content” of documents filed in other cases as they “directly 5 relat[ed]” to whether and when plaintiff had notice of his 6 potential claims such that they would not be barred by the 7 applicable statutes of limitations[]); see also Ritchey v. Upjohn 8 Drug Co., 139 F.3d 1313, 1319-20 (9th Cir. 1998) (“[W]hen the 9 strobe of judicial notice is played upon [plaintiff’s] pleading, it See Yeager v. Bowlin, 10 appears perfectly clear that the statute of limitations is a 11 defense[.]”) 12 The parties agree that California’s four year statute of 13 limitations for breach of contract actions, Cal Code Civ. Proc. § 14 337(1),5 applies to this declaratory judgment action premised upon 15 breach of the APA. 16 at *9 (N.D.Cal. June 15, 2005) (applying California’s four year 17 statute of limitations in declaratory judgment action based upon 18 breach of contract) (citing, inter alia, 118 East 60th Owners, Inc. 19 v. Bonner Properties, Inc., 677 F.2d 200, 2002 (2d Cir. 1982) 20 (“When the declaratory judgment sought by a plaintiff would declare 21 his entitlement to some affirmative relief, his suit is time-barred 22 if the applicable limitations period has run on a direct claim to 23 obtain such relief.”)) They disagree, however, as to the accrual 24 25 26 27 28 See Booth v. Quantum3d, Inc., 2005 WL 1512138, 5 California law applies because that is the “governing law” of the APA. RJN (doc. 11), exh. B thereto at 11, § 8.16. This choice of law provision includes limitations periods. See In re Western United Nurseries, Inc., 2000 WL 34446155, at *8 (D.Ariz. July 3, 2000) (footnote omitted) (“Arizona’s conflict-of-law principles no longer treat limitations periods as procedural matters to be determined by the law of the forum. Instead, section 187 of the Restatement requires that a valid, general choice-of-law clause be deemed to include the statutes of limitations of the chosen state.”), amended in part, vacated in part on rehearing on other grounds, 2000 WL 3448963 (D.Ariz. Sept. 29, 2000). - 15 - 1 2 date for that statute of limitations. Autodesk maintains that PageMasters’ cause of action accrued 3 in October, 2000, prior to the Autodesk/Buzzsaw merger, when 4 PageMasters began to conduct an audit pursuant to the Océ 5 Agreement. 6 the [reasonable] assistance clause at that time[,]” but it did not. 7 Mot. (doc. 10) at 11:2-3 (citation omitted). 8 waited until seven years later, March, 2008, when it commenced this 9 lawsuit to attempt to enforce that clause against Autodesk. 10 Autodesk asserts that “PageMasters could have enforced Instead, PageMasters Thus, Autodesk argues that this action is time-barred. 11 Alternatively, Autodesk contends that PageMasters was on 12 notice of its claim against Autodesk at least by November 26, 2003, 13 when it filed a motion to join Autodesk as an “indispensable party” 14 in the arbitration. 15 (citation omitted); and exh. N thereto. 16 contends that this action is not timely because it accrued at the 17 time of that notice, on November 26, 2003, more than four years 18 prior to the commencement of this action. See RJN (doc. 11), exh. D thereto at 5, ¶ 17 Therefore, Autodesk 19 PageMasters did not dispute or otherwise respond to Autodesk’s 20 arguments that the accrual date is either October 2000, or November 21 23, 2006. 22 agreements as to performance of an audit by Autodesk, PageMasters 23 declares that the statute of limitations “did not accrue until it 24 sent [a] written demand to Autodesk on September 12, 2007, and 25 Autodesk notified PageMasters that it was refusing to perform the Instead, noting the absence of any “deadline” in the 26 27 28 - 16 - 1 duties demanded of it by PageMasters.6” 2 (emphasis added). 3 was filed less than a year later, on March 20, 2008, is timely. 4 Resp. (doc. 17) at 4 Thus, PageMasters argues that this action, which Autodesk challenges PageMasters’s reliance upon “‘discussions’ 5 and correspondence” not alleged in the complaint as a basis for 6 establishing a September 2007 accrual date. 7 matters into account, it is Autodesk’s position that it should 8 still prevail on its statute of limitations defense because, 9 basically, PageMasters sat on its rights by not making a demand for Even taking those 10 performance earlier. 11 authority because those cases did not involve “the situation in 12 which the plaintiff’s right to demand performance has accrued but 13 nonetheless the plaintiff fails to exercise that right within the 14 limitations period.” 15 Finally, Autodesk distinguishes PageMasters’ Reply (doc. 20) at 6:7-9 (footnote omitted). “Under California law, an action must be commenced within the 16 prescribed limitations period ‘after the cause of action shall have 17 accrued.’” Diorio v. Coca-Cola Company, 2009 WL 483190, at *2 18 (S.D.Cal. Feb. 24, 2009) (quoting CAL. CODE CIV. PROC. § 312). 19 California, “[a] cause of action accrues when the wrongful act is 20 done and the consequent liability arises.” 21 “[I]n ordinary . . . contract actions, the statute of limitations . 22 . . begins to run upon the occurrence of the last element essential 23 to the cause of action.” 24 1032, 1039 (9th Cir. 2003) (internal quotation marks and citation In Id. (citation omitted). El Pollo Loco, Inc. v. Hashim, 316 F.3d 25 26 27 6 As discussed earlier, the court is not considering this September 12, 2007 letter. Nonetheless, the court observes that there is nothing in that letter or elsewhere which indicates when Autodesk purportedly refused to perform. Hence, it is impossible to ascertain both when PageMasters demanded that Autodesk fulfill its responsibilities under the APA, and, in turn, when Autodesk supposedly refused. 28 - 17 - 1 omitted). 2 not specify a time for “performance of an act required to be 3 performed,” then, “a reasonable time is allowed.” 4 1657. In a case such as this, however, where the contract does Cal. Civ. Code § 5 By contending that the accrual date is September 12, 2007, 6 Autodesk retorts that PageMasters “ignore[s]” the “well-settled 7 principle” that where a contract “provides that a party can demand 8 action by another party, that party cannot unilaterally toll the 9 statute of limitations indefinitely by refusing to make a demand.” 10 Reply (doc. 20) at 4:25-26 (citation omitted). 11 PageMaster’s disregard for that principle which undermines its 12 argument that the accrual date is September 12, 2007. 13 Autodesk alludes to, and explained below, it is PageMasters’ 14 failure to make a demand within the statute of limitations which 15 defeats its suggestion of a September 12, 2007 accrual date. 16 It is not Rather, as “Where a demand is an integral part of a cause of action, the 17 statute of limitations does not run until demand is made.” 18 v. City of Santa Barbara, 229 Cal.App.2d 45, 55, 40 Cal.Rptr. 27, 19 31 (1964) (internal quotation marks and citation omitted). 20 Generally, “where demand is necessary to perfect a right of action 21 and no time therefore is specified in the contract, the demand must 22 be made within a reasonable time after it can lawfully be made.” 23 Id. (internal quotation marks and citations omitted). 24 reasonable time depends upon the circumstances of each case; but in 25 the absence of peculiar circumstances, a time coincident with the 26 running of the statute will be deemed reasonable, and if a demand 27 is not made within that period, the action will be barred.” 28 (internal quotation marks and citation omitted). - 18 - Phillis “What is a Id. 1 Applying these well-settled rules to the present case, clearly 2 this action is time-barred. 3 in which PageMasters was required to demand that Autodesk provide 4 “reasonable assistance” with the Océ audit. 5 suggestion of “peculiar circumstances.” 6 PageMasters’ action to be timely, it should have demanded that 7 Autodesk provide reasonable assistance with the Océ audit within 8 four years of the time it first initiated the audit. 9 words, it should have demanded reasonable assistance by October The APA does not specify a time frame And, there has been no That means that for In other 10 2004 at the latest. 11 a demand within that four year time frame. 12 grants Autodesk’s motion to dismiss based upon the statute of 13 limitations. 14 *2 (W.D.Wash. Feb. 22, 2008) (citation omitted).7 15 II. 16 It is undisputed that PageMasters did not make Accordingly, the court See Guerrero-Melchor v. Arulaid, 2008 WL 539054, at Failure to State a Claim Although the court has found that this action is time barred, 17 it will, nonetheless, address Autodesk’s argument on the merits. 18 Even if timely, Autodesk maintains that dismissal is proper because 19 7 20 21 22 23 24 25 26 27 Having resolved Autodesk’s statute of limitations argument on the grounds of failure to timely make a demand, there is no need to consider its alternative argument that PageMasters had notice inquiry of its claim on November 26, 2003, when it first filed a motion to join Autodesk as an indispensable party. The court does have two observations about Autodesk’s attempt to invoke what is commonly referred to as the discovery rule. First, “[t]here is generally little need” to rely upon that rule “in breach of contract cases[,]” such as this. See Leonard v. The College Network, Inc., 2004 WL 2944050, at *4 (N.D.Cal. Dec. 17, 2004). The discovery rule may be applied in “unique breach of contract cases[,]” essentially “involving fraud or misrepresentation[,]” El Pollo Loco, 316 F.3d at 1039 and 1040 (internal quotation marks and citations omitted); but, PageMasters’ complaint does not include any such allegations. Second, and more importantly, typically plaintiffs - not defendants – invoke the discovery rule, which “permits delayed accrual until a plaintiff knew or should have known of the wrongful conduct at issue.” Id. at 1039(internal quotation marks and citation omitted). In light of the foregoing, the court has serious reservations whether the discovery rule can be applied defensively. Resolution of that issue can be left to another day however. 28 - 19 - 1 this action is based on the “unfounded assertion” that it had an 2 obligation under the APA to “demand and perform” an audit of Océ’s 3 financial records. 4 obligation under the APA was much more limited, it asserts, 5 requiring only that it provide “‘reasonable assistance’” to 6 PageMasters in conjunction with the Océ audit. 7 (quoting, inter alia, RJN (doc. 12), exh. B thereto at 20, § 5.16)) 8 9 Mot. (Doc. 10) at 17:3-4. Autodesk’s Id. at 16:10 Remarkably, PageMasters did not respond at all to this argument. The court construes PageMasters’ silence as conceding 10 the validity of Autodesk’s argument on the merits. 11 Schwartz, 2007 WL 419463, at *3 (E.D.Cal. Feb. 5, 2007) (granting 12 defendants’ motion to dismiss where plaintiff “tacitly concede[d] 13 . . . claim by failing to address defendants’ argument in her 14 opposition[]”). 15 would prevail for the reasons set forth below. 16 See Tatum v. Even without that implicit concession, Autodesk A cause of action for breach of contract in California 17 “requires proof of the following elements: (1) existence of the 18 contract; (2) plaintiff’s performance or excuse for nonperformance; 19 (3) defendant’s breach; and (4) damages to plaintiff as a result of 20 the breach.” 21 (E.D.Cal. July 16, 2008) (quoting CDF Firefighters v. Maldonado, 22 158 Cal.App.4th 1226, 1239, 70 Cal.Rptr.3d 667 (2008)). 23 “Resolution of contractual claims on a motion to dismiss is proper 24 if the terms of the contract are unambiguous.” 25 Stearns Residential Mortgage Corp., 554 F.Supp.2d 1034, 1040 26 (C.D.Cal. 2008) (internal quotation marks and citations omitted). 27 The court must decide in the first instance “whether the contract 28 language is clear or ambiguous[.]” Navarro v. Mukasey, 518 F.3d Nava v. VirtualBank, 2008 WL 2873406, at *10 - 20 - Monaco v. Bear 1 729, 734 (9th Cir. 2008) (citing Bank of the West v. Superior 2 Court, 2 Cal.4th 1254, 10 Cal.Rptr.2d 538, 545, 833 P.2d 545 3 (1992)). 4 Under California law, “[a] contract provision will be 5 considered ambiguous when it is capable of two or more reasonable 6 interpretations.” 7 omitted). 8 interpreted as a whole and in the circumstances of the case.” 9 (citation omitted). Monaco, 544 F.Supp.2d at 1040 (citation In construing a contract, “[l]anguage . . . must be Id. “Where the language leaves doubt as to the 10 parties’ intent, . . . the motion to dismiss must be denied.” 11 (internal quotation marks and citations omitted). 12 token though, “[i]f the contract language is clear, [the court] 13 give[s] effect to its plain meaning.” 14 (citation omitted); see also Arbor Acres Farm, Inc. v. GRE Ins. 15 Group, 2002 WL 32107944, at *2 (E.D.Cal. Jan. 23, 2002) (internal 16 quotation marks and citation omitted) (“Interpretation of written 17 instrument is solely a judicial function unless the determination 18 turns upon the credibility of extrinsic evidence.”) 19 20 21 22 23 24 Id. By the same Navarro, 518 F.3d at 734 Here, the parties have differing interpretations of the APA’s single audit provision. As recited earlier, that provision states: [Autodesk] will provide reasonable assistance to [PageMasters] to assist [PageMasters] in conducting a single audit of Océ’s financial records (as permitted under the Océ Agreement) to verify amounts due and paid by Océ to [PageMasters] prior to the Closing, and will pay [PageMasters] the Net Revenues actually recovered pursuant to such audit. 25 RJN (doc. 11), exh. B thereto at 20, § 5.16 (emphasis added). 26 Quoting directly from section 5.16, Autodesk reads that section as 27 requiring that it provide “reasonable assistance” to PageMasters 28 “to assist” PageMasters in conducting the audit. - 21 - Apparently, in 1 Autodesk’s view, “reasonable assistance” does not encompass 2 demanding the audit of Océ in the first place. 3 Based upon the allegations in the complaint, however, 4 evidently PageMasters is construing section 5.16 as requiring 5 Autodesk to demand an audit of Océ. 6 that Autodesk breached “its responsibilities under . . . the 7 [APA][,]” by not “demand[ing] an audit of Oce’s financial 8 records[.]” Co. (doc. 1) at 3, ¶¶ 9 and 11 (emphasis added). 9 relief which PageMasters seeks is even broader in scope. PageMasters expressly alleges The As a 10 result of that alleged breach, PageMasters seeks a declaration that 11 “Autodesk is not only required to “demand . . . an audit of Oce’s 12 financial records[,]” but also to “perform” that audit. 13 id. at 3, ¶ (A) (emphasis added). 14 See Applying the familiar rules of contract interpretation 15 construction outlined above, the court finds that section 5.16 of 16 the APA is clear and unambiguous. 17 reasonable interpretations. It is not capable of two or more That section requires, as Autodesk 18 maintains, only that Autodesk give “reasonable assistance” to 19 PageMasters in conducting the audit. Making the initial demand for 20 the audit does not come within the plain and ordinary meaning of 21 “assist.” “The American Heritage Dictionary of the English 22 Language defines ‘to assist’ as ‘[t]o give help or support to, 23 especially as a subordinate or supplement; aid.’” U.S. v. 24 Approximately 64,695 Pounds of Shark Fins, 520 F.3d 976, 980 (9th 25 Cir. 2008) (quoting American Heritage Dictionary of the English 26 Language (4th ed.2000)) (emphasis added). Nor under any reasonable 27 interpretation of “assistance” can performance of the audit, as 28 PageMasters seeks in its prayer for relief, constitute mere - 22 - 1 “assistance.” Under the circumstances, the assistance language in 2 the APA, which necessarily includes an element of subordination, 3 cannot reasonably be read to require Autodesk to demand an audit of 4 Océ in the first instance. Moreover, the court cannot ignore the 5 fact that nowhere in the APA is Autodesk under any obligation to 6 “demand and perform” an audit of Océ - the precise relief to which 7 PageMasters claims it is entitled. See Co. (doc. 1) at 3, ¶ (A). 8 Therefore, the court finds that Autodesk is entitled to dismissal 9 of the complaint as against it because it is “clear from the 10 unambiguous terms of the [APA] that the alleged conduct by 11 [Autodesk] does not constitute breach of contract.” See Mieuli v. 12 Debartolo, 2001 WL 777447, *5 (N.D.Cal. Jan. 16, 2001) (citations 13 omitted). 14 The court would be remiss if it did not address PageMasters’ 15 suggestion that its summary judgment order in PageMasters II 16 somehow governs the scope of the parties’ obligations here. 17 PageMasters’ reliance upon that order is misplaced because Autodesk 18 was not a party to that action. Therefore, any findings therein 19 cannot be given preclusive effect against Autodesk, based upon the 20 doctrine of collateral estoppel. See Kendall v. Visa U.S.A., Inc., 21 518 F.3d 1042, 1050 (9th Cir. 2008) (internal quotation marks and 22 citation omitted) (“Issue preclusion prevents a party from 23 relitigating an issue decided in a prior action if four 24 requirements are met[,]” including “the person against whom 25 collateral estoppel is asserted in the present action was a party 26 or in privity with a party in the previous action.”) Not only that, 27 if PageMasters is attempting to rely upon collateral estoppel, it 28 has failed to meet its burden because it has not proven that each - 23 - 1 of the four elements of issue preclusion are met here. 2 1050-1051. See id. at Finally, the court notes that consistent with its 3 reading herein of section 5.16 of the APA, in PageMasters II, it 4 read that same section as “merely an agreement between PageMasters 5 and [Autodesk] that requires [Autodesk] to allow and assist such an 6 audit[.]” RJN (doc. 11), exh. K thereto at 9:11-13 (emphasis 7 added). For all of these reasons, the court finds that PageMasters 8 has failed to state a claim for which relief may be granted against 9 Autodesk. 10 11 Conclusion Having found that this action is barred by California’s four 12 year statute of limitations for breach of contract, and that, 13 alternatively, plaintiff has failed to state a cause of action for 14 breach of contract under California law,8 IT IS ORDERED that: 15 (1) “Defendant Autodesk, Inc.’s Motion to Dismiss PageMasters’ 16 Complaint” (doc. 10) is GRANTED; and the complaint is dismissed 17 with prejudice; and 18 (2) the Clerk of the Court is directed to enter JUDGMENT in 19 favor of defendant Autodesk, Inc. and to terminate the case. 20 DATED this 30th day of March, 2009. 21 22 23 24 25 26 Copies to counsel of record 27 8 28 Given these alternative bases for dismissal, there is no need to consider Autodesk’s laches argument. - 24 -
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