Lim v. The. Tv Corp. Intern.

• Decision Date: 24 June 2002
• Docket Number: No. B151987.,B151987.
• Citation: 121 Cal.Rptr.2d 333,99 Cal.App.4th 684
• Court: California Court of Appeals Court of Appeals
• Parties: Je Ho LIM, Plaintiff and Appellant, v. THE. TV CORPORATION INTERNATIONAL, Defendant and Respondent.

121 Cal.Rptr.2d 333

99 Cal.App.4th 684

Je Ho LIM, Plaintiff and Appellant, v. THE. TV CORPORATION INTERNATIONAL, Defendant and Respondent.

No. B151987.

Court of Appeal, Second District, Division 4.

June 24, 2002.

Law Offices of Richard D. Farkas and Richard D. Farkas, Sherman Oaks, for Plaintiff and Appellant.

Latham & Watkins, Perry J. Viscounty, Mark A. Finkelstein, Costa Mesa, and Allison K. Chock, for Defendant and Respondent.

EPSTEIN, Acting P.J.

This is a pleading case, reaching us after a demurrer to the last permitted pleading was sustained without leave to amend. The case arises in the context of an auction, and we are asked to decide, primarily, whether the pleading adequately states a cause of action for breach of a contract formed by that process. We also are asked to decide whether other, related causes of action were adequately pleaded. We conclude the demurrer should have been overruled.

FACTUAL AND PROCEDURAL SUMMARY

Since this is a pleading case, we focus on the charging pleading, the second amended complaint. We refer to earlier pleadings only as they are pertinent to the permissibility and adequacy of the charging pleading. We begin with a discussion of the general allegations, and the first cause of action for breach of contract.

Plaintiff Je Ho Lim is a resident of South Korea, doing business as Future Computing Solutions. Defendant is sued as dotTV Corporation, a Delaware corporation with principal offices in California. (We are informed that its actual name is The.TV Corporation International, but we shall use the style adopted by both sides in the trial court litigation and in their appellate briefs.) DotTV registers Internet domain names for a fee. It acquired the toplevel domain name "tv" through an agreement with the island nation of Tuvalu, which owns the rights to that geographic designation. DotTV offers to register most names on a first come-first served basis, for $50 a year. The party paying the fee has its name registered with the letters "tv" appearing after the dot. The combined designation is its domain name. Thus, a person named Jones who is first to register his name with the designation would own the right to use the name "Jones.tv." Defendant uses the public auction method to sell registration for common or generic names that it deems to have broader commercial appeal. The name "Golf.tv" was deemed by defendant to fall into that category, and defendant posted it on its web site for auction to the highest bidder. (The name "golf sometimes appears in the pleadings and briefs in its proper noun form, "Golf," and sometimes in lower case; we, too, use the names interchangeably.) The pleadings about the handling of this auction are central to this appeal.

Following is a synopsis of the substance of plaintiffs allegations about the auction sale of the domain name. By offering registration of the name through its Internet website, defendant intended to effectuate transfer of the Golf.tv domain name to the person or entity that submitted the highest bid. It began offering the name in April 2000, and plaintiff bid $1,010 for it on or about May 25, 2000. Defendant represented that the auctions for ".TV" domain names it controlled, such as "Golf.tv", would be fair and open. Offering the name at auction was an offer, and plaintiffs bid was an acceptance, conditioned on there being no higher bids. Since plaintiff accepted the offer precisely as it was made, and no one submitted a higher bid, a contract resulted between the parties. Plaintiffs acceptance of dotTV's offer was pursuant to established law as well as Internet custom and practice, and in accordance with policies and procedures established by defendant. Plaintiff authorized charging his credit card for the amount of the bid. Defendant memorialized the contract by an e-mail to plaintiff, and charged plaintiffs credit card for the amount of the bid. This price was for a first-year registration, and defendant also agreed that the annual fee after that would increase by five percent and that plaintiff "would have `the guaranteed fright to renew the registration indefinitely.'" The e-mail notification to plaintiff was, in its own terms, an "`E-MAIL INVOICE FOR DOMAIN REGISTRATION.'" It was sent in response to plaintiffs bid ("acceptance") and stated "`Congratulations!' and `You have won the auction....'" The only auction in which plaintiff participated with defendant was the one for the name rights to "Golf, tv," the name offered by defendant.

The e-mail from defendant is an incorporated exhibit of the pleading. In pertinent part, it reads:

"dotTV—The New Frontier on the Internet

"E-MAIL INVOICE FOR DOMAIN REGISTRATION

"Name: JE HO LIM

"Congratulations!

"You have won the auction for the following domain name:

"Domain Name:____golf

"Subscription Length: 2 years, starts from activation date

"Amount (US$): $1,010 (first year annual registration fee)

"Please remember that the annual registration fee increases by 5% annually. You have the guaranteed right to renew the registration indefinitely.

"dotTV expects to charge your card and activate the registered domain names by May 15, 2000. All registrants will be contacted by email to provide additional information in order to activate the registered domain names.

"...........................

"See ya on the new frontier of the Internet!

"Lou Kerner CEO, dotTV Corporation www.TV"

But "[t]hereafter" defendant tried to renege and disavow the agreement. It notified plaintiff that "`we have decided to release you from your bid'" and that plaintiff should "`disregard'" the acceptance notification, "purportedly blaming `an email error that occurred.'" Later, defendant publicly offered the name "Golf, tv" with an opening bid (which we take to mean a reserve) of $1,000,000.

Plaintiff authorized credit card payment for his winning bid. (The pleading is not clear whether this was part of the bidding process itself, or was in response to the notification that plaintiff had "won the auction.") Plaintiff formally demanded that all right, title and interest in the name "Golf.tv" be confirmed to him, and that defendant take no action to offer the name to others or dilute plaintiffs interest. "Defendant refused, claiming that `the reserve price on the auction had not been met' and that Plaintiff was `merely trying to capitalize on a technical error that occurred in our system.'"

The pleading alleges that after plaintiffs successful bid, defendant tried to disavow "its acceptance of Plaintiffs offer" by claiming that the e-mail concerned a different domain name, "____golf instead of "golf." Plaintiff alleges this was pretextual, as characters such as the two dashes ("____") are not recognized in the Internet, and the name "____golf is invalid, a fact recognized by defendant itself.

The complaint goes on to allege causes of action for intentional misrepresentation and fraud, breach of the implied covenant of good faith and fair dealing, and for declaratory relief. We shall discuss these later in our opinion.

As we have indicated, the trial court sustained defendant's demurrer to this pleading without leave to amend. It explained its reasons in a four-page order.

With respect to the breach of contract cause of action, the court recounted that the first amended complaint alleged that the bid for the domain name "golf.tv" was an offer and was accepted by defendant's e-mail. The court ruled that the e-mail referred to the name as "____golf," which is different from "golf," and since the offer and acceptance referred to different names, no contract was formed. The order states that in the second amended complaint plaintiff tried to plead around this problem by alleging that the bid was an acceptance of defendant's offer and that the e-mail merely memorialized the agreement, but that this is impermissible because it is inconsistent with the earlier pleading.

Judgment of dismissal was signed shortly after the ruling, and a timely notice of appeal was filed after that.

DISCUSSION

I

As we noted at the outset, this is a pleading case. In an original Field Code provision, Code of Civil Procedure section 452 commands that "In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties." (See 4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 403, p. 501.) California law emphasizes ultimate fact pleading (with some exceptions, notably for fraud and related torts) "in ordinary and concise language," and the test for adequacy is not absolute but "whether the pleading as a whole apprises the adversary of the factual basis of the claim." (Id., § 339, pp. 436, 438; see also Semole v. Sansoucie (1972) 28 Cal. App.3d 714, 719,104 Cal.Rptr. 897.)

Unless special rules apply, it is apparent that plaintiff has adequately pleaded a contract. Plaintiffs theory is that by announcing the terms of the auction on its website, defendant made an offer to sell the registration rights to the name "Golf, tv" to the highest bidder; that plaintiffs bid accepted the offer, in the exact terms in which it was made; and that since there were no higher bids, a contract was formed selling the registration rights to plaintiff. Plaintiff did not set out the website announcement in haec verba, but he is not required to do so; a contract may be pleaded according to its legal effect. (See 4 Witkin, Cal. Procedure, supra, Pleadings, § 480, p. 573.)

Defendant counters that the website posting was not an offer but a solicitation for an offer, much like a general advertisement. The problem with that argument is that an advertisement can constitute an offer, depending on how it is phrased and perhaps on other circumstances. (See Harris v. Time, Inc. (1987) 191 Cal.App.3d 449, 455, 237 Cal.Rptr. 584.) Plaintiff pleaded it as an offer, and we must accept the pleading as he stated it.

Defendant argues that...