Valley Outdoor v. Regency Outdoor Advertising

Filed 9/5/06 Valley Outdoor v. Regency Outdoor Advertising CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

APPEAL from a judgment and from an order of the Superior Court for the County of Los Angeles. William F. Fahey, Judge. Affirmed.

McGuireWoods, Eliot G. Disner and Darrel C. Menthe for Cross-Complainants and Appellants.

Baute & Tidus, Jeffrey A. Tidus and David P. Crochetiere for Cross-Defendants and Respondents.

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SUMMARY

In litigation between competitors in the outdoor advertising industry, the trial court correctly sustained a demurrer to causes of action in a cross-complaint for breach of contract, fraud and negligent misrepresentation, and properly dismissed a fourth cause of action for declaratory relief relating to billboards in Oceanside and Riverside. The trial court also properly sustained a demurrer to a fifth cause of action for unfair competition involving billboards in other locations that allegedly violate various state and local ordinances. The trial court awarded attorney fees of $464,720.75 to the prevailing party under the attorney fee clause of a contract between the parties, concluding that the multiple causes of action were inextricably intertwined and fees could not be apportioned between contract and non-contract claims. We affirm the court's attorney fee order.

FACTUAL AND PROCEDURAL BACKGROUND

Valley Outdoor, Inc. and its principal, J. Keith Stephens (collectively, Valley), filed a cross-complaint against Regency Outdoor Advertising, Inc. and its principals, Drake Kennedy and Brian Kennedy (collectively, Regency). Valley's cross-complaint was brought in a lawsuit filed by Outdoor Media Group, Inc. (OMG) against Valley and others. Valley, Regency and OMG are involved in the billboard advertising business, and have a considerable and contentious litigation history involving billboards in Riverside and Oceanside. To understand Valley's claims and their resolution, it is necessary to summarize several prior lawsuits and agreements, as well as to identify the entities and persons involved.

1. The players.

Valley, Regency and OMG are competitors in the outdoor advertising industry.

J. Keith Stephens, now the owner of Valley, was hired by Regency in 1988. Stephens succeeded in substantially increasing Regency's billboard business. While working for Regency and with its approval, Stephens formed his own company, whose corporate name was eventually changed to Valley. Regency supported the formation of Valley, because the principals of both companies wanted to use Valley to facilitate certain transactions. Regency sometimes compensated Stephens for his work for Regency by transferring to Valley some of its sign rights.

Beginning in 1994, OMG – which is not a party to this appeal – became involved in litigation with the city of Riverside over OMG's construction of billboard signs, including a challenge to the constitutionality of a Riverside ordinance. OMG later brought a lawsuit challenging an Oceanside ordinance. The parties refer to these suits as the Riverside litigation and the Oceanside litigation, respectively. Further litigation ensued among the three competitors over the billboards in Riverside and Oceanside.

2. The first lawsuit and settlement: Regency v. OMG.

In April 1998, Regency sued OMG, asserting claims relating to the wrongful construction of billboards in Riverside. Regency and OMG settled the lawsuit, and agreed to various other matters, in an agreement dated June 8, 1998. Under the agreement, OMG transferred to Regency, without warranties, all its rights to certain Riverside billboards. OMG also agreed to transfer to Regency all its rights to a billboard in Oceanside. Regency and OMG agreed to cooperate with each other in respect to the ongoing Riverside and Oceanside litigation. Regency and OMG agreed that if OMG acquired rights to any additional billboards as a result of that litigation, OMG would transfer to Regency its interest in one-half of the billboards.

3. The June 1998 memorandum of agreement between

Regency and Valley (the 1998 MOA).

A few days after Regency and OMG reached the settlement just described, Regency and Valley entered into a memorandum of agreement dated June 11, 1998 (1998 MOA). In the 1998 MOA, Regency transferred to Valley all the sign rights Regency acquired from OMG in Oceanside (Oceanside signs) as a result of the Regency/OMG settlement. The 1998 MOA specified that Regency would retain all signs and sign rights it acquired from OMG in the County of Riverside (Riverside signs). Regency's transfer of Oceanside sign rights to Valley was a part of Stephens' compensation for work he performed on other projects for Regency.

4. The second lawsuit and the July 2002 settlement:

Valley v. Regency.

Almost four years later, on April 23, 2002, Valley sued Regency for unfair business practices and fraud. The action also involved a declaratory relief claim to determine the parties' respective ownership interests in the Oceanside and Riverside signs. Valley asserted that, after forcing Stephens to resign from Regency, Regency demanded transfer of virtually all of Valley's billboards to Regency, and falsely claimed that most of the billboards operated by Valley were Regency's property, including the signs Regency had obtained from OMG and transferred to Valley.

This litigation was settled a few months later by agreement dated July 18, 2002 (July 2002 settlement). In the settlement, Regency disclaimed any interest in the Oceanside and Riverside signs, and assigned to Valley all leases and other indicia of ownership Regency had in the signs, as of the effective date of the agreement (July 15, 2002).

5. The litigation agreement between Regency and OMG.

Meanwhile, after Valley filed its suit against Regency, but before the July 2002 settlement, Regency entered into a â€