Moritz v. Universal City Studios LLC

• Decision Date: 02 September 2020
• Docket Number: B299083
• Citation: 54 Cal.App.5th 238,268 Cal.Rptr.3d 467
• Parties: Neal MORITZ et al., Plaintiffs and Respondents, v. UNIVERSAL CITY STUDIOS LLC et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

54 Cal.App.5th 238

268 Cal.Rptr.3d 467

Neal MORITZ et al., Plaintiffs and Respondents,

v.UNIVERSAL CITY STUDIOS LLC et al., Defendants and Appellants.

B299083

Court of Appeal, Second District, Division 1, California.

Filed September 2, 2020

Quinn Emanuel Urquhart & Sullivan, Bruce E. Van Dalsem, Daniel C. Posner, Los Angeles, and M. Alex Bergjans for Defendants and Appellants.

Kinsella Weitzman Iser Kump & Aldisert, Dale F. Kinsella, Suann C. MacIsaac, Santa Monica, and Zachary T. Elsea for Plaintiffs and Respondents.

CHANEY, J.

Over the course of approximately 16 years, respondents Neal Moritz and Neal H. Moritz, Inc. (collectively, Moritz) worked for appellants, Universal City Studios LLC and its wholly-owned subsidiary, FFSO Productions LLC (collectively, Universal), rendering services as a producer for the film The Fast and the Furious (Universal Pictures 2001) and several sequels thereto (collectively, the Fast & Furious franchise). The lawsuit underlying this appeal involves a "spin-off" of the Fast & Furious franchise, a project ultimately released as Fast & Furious Presents: Hobbs & Shaw (Universal Pictures 2019) (Hobbs & Shaw), on which Moritz allegedly worked as a producer pursuant to an oral agreement with Universal. Moritz named Universal, as well as appellant Jimmy Horowitz, president of Universal City Studios LLC (collectively, appellants) as defendants in the suit. Appellants moved to compel arbitration of the suit based on arbitration agreements in written producer contracts regarding Moritz's work for Universal on the Fast & Furious franchise. The court concluded that these arbitration agreements did not apply to the Hobbs & Shaw dispute, and denied appellants’ motion.

Appellants contend the court erred by deciding whether the Hobbs & Shaw dispute was arbitrable under the arbitration agreements contained in the Fast & Furious contracts, as those agreements are valid and binding on all parties and delegate the question of arbitrability to an arbitrator. We disagree, and therefore affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Parties’ Producer Contracts Regarding the Fast & Furious Franchise

It is undisputed that Moritz and Universal entered into seven written producer contracts setting forth the terms under which Moritz rendered services as a producer on the films in the Fast & Furious franchise, and that all these contracts (collectively, the Fast & Furious contracts) remain valid and binding. Specifically, that Moritz and Universal entered into separate contracts for the first, second, third, fourth, sixth and seventh movies in the franchise: The Fast and the Furious (Universal Pictures 2001), 2 Fast 2 Furious (Universal Pictures 2003), The Fast and the Furious: Tokyo Drift (Universal Pictures 2006), Fast & Furious (Universal Pictures 2009), Fast & Furious 6 (Universal Pictures 2013), and Furious 7 (Universal Pictures 2015) (respectively, the FF1 contract, FF2 contract, FF3 contract, FF4 contract, FF6 contract, and FF7 contract). They entered into no written contract regarding the fifth movie in the franchise, Fast Five (Universal Pictures 2011). Finally, they entered into a single written producer contract to govern the eighth, ninth, and tenth movies in the franchise (the FF8-10 contract). The FF8-10 contract is less than two pages long and requires that the terms of the FF7 contract (with limited modifications) apply to any movie constituting a "sequel" or "remake" of earlier films in the franchise. Of the movies contemplated by the FF8-10 contract, only the eighth movie in the franchise, The Fate of the Furious (Universal Pictures 2017), has been made to date. The parties agree The Fate of the Furious (Universal Pictures 2017) constitutes as a sequel for the purposes of the FF8-10 contract.

It is also undisputed that the first six of the Fast & Furious contracts contain valid arbitration clauses. Specifically, the FF1, FF2, FF3, and FF4 contracts all provide, in pertinent part, that "[a]ny controversy, claim, or dispute arising out of or related to this [a]greement or the interpretation, performance, or breach hereof ... shall be resolved according to the procedures set forth in this paragraph which shall constitute the sole dispute resolution mechanism hereunder." In all four contracts, these procedures require arbitration when initial mediation is unsuccessful.

The FF6 and FF7 contracts provide that "[a]ny controversy, claim, or dispute arising out of or relating to this [a]greement or this agreement to arbitrate, including, without limitation ... any such controversy, claim or dispute against or involving any officer, director, agent, employee, [or] affiliate ... of a party to this Agreement ... shall be fully and finally adjudicated by binding arbitration to the fullest extent allowed by law."

The FF8-10 contract includes no separate arbitration clause, but the contract subjects movies produced as "sequels" or "remakes" to the arbitration clause in the FF7 contract.

The arbitration clauses in the FF1-FF4 contracts delegate questions of arbitrability to an arbitrator by providing that "[t]he arbitration shall be initiated and conducted according to the JAMS/Endispute Comprehensive Arbitration Rules and Procedure" (JAMS rules). The JAMS rules, in turn, require that "[j]urisdictional and arbitrability disputes, including disputes over the existence, validity, interpretation or scope of the agreement under which [a]rbitration is sought ... shall be submitted to and ruled on by the [a]rbitrator. The [a]rbitrator has the authority to determine jurisdiction and arbitrability issues as a preliminary matter." We will call this a delegation clause.

The arbitration clauses in the FF6 and FF7 contracts contain no similar delegation clause, but provide that "[a]ny controversy, claim, or dispute arising out of or relating to this [a]greement or this agreement to arbitrate ... shall be fully and finally adjudicated by binding arbitration to the fullest extent allowed by law." (Italics added.)

B. The Hobbs & Shaw Project

During work on the eighth movie in the Fast & Furious franchise, Moritz and Universal began discussing a spin-off film referred to as Hobbs & Shaw, which would be based on characters from prior films in the franchise. The FF8-10 contract did not subject Hobbs & Shaw to the modified terms of the FF7 contract, as the film was neither a "remake" nor a "sequel."

Moritz and Universal exchanged written drafts of a producer contract for Hobbs & Shaw, which included a proposed arbitration agreement, but the parties never finalized or signed any written contract agreement for Moritz's work on the film.

Shortly before filming of Hobbs & Shaw was set to begin, Universal informed Moritz that "Universal is under no obligation to involve ... Moritz in the production [of Hobbs & Shaw], nor to compensate [him] in connection with it," and instructed Moritz not to "render any services in connection with the [p]icture or be involved with the production in any capacity" "until such time as an agreement is reached."

C. Moritz's Complaint Regarding Hobbs & Shaw

Soon after Universal advised Moritz of its view that the parties had no binding agreement regarding Hobbs & Shaw, Moritz sued Universal,¹ alleging that Moritz and Universal had reached a binding oral agreement regarding Moritz's work on the film, which Universal had breached. The operative version of Moritz's complaint is the first amended complaint (FAC), filed June 28, 2019.

In the FAC, Moritz alleges that in connection with the Fast & Furious contracts, Moritz and Universal had "fully negotiated and agreed upon an oral producer deal before any writings were exchanged" (italics omitted), and that "[t]ypically, Moritz would begin working on the production of the film prior to the oral producer deal being reduced to writing." Moritz alleges that this again occurred with respect to Hobbs & Shaw, but this time, Universal failed to honor the terms of the parties’ oral agreement.

The FAC summarizes key financial provisions of the various Fast & Furious contracts, and alleges that "[f]or purposes of this [c]omplaint, there is one written producer agreement between Moritz and Universal that is relevant[,] ... [t]he FF8-10 [contract]." More specifically, Moritz alleges that "before beginning substantial work on the [p]icture, the [p]resident of Universal [City Studios LLC] ... orally agreed with Moritz that [Moritz's] ... compensation for producing Hobbs [&] Shaw would be ... the first dollar gross compensation option in the FF8-10 [a]greement." (Italics omitted.) Similarly, the FAC alleges that the financial terms for the Hobbs & Shaw producer contract were "modeled after the first dollar gross compensation option in the FF8-10 [a]greement," and that "[t]he parties had never discussed or agreed that the financial terms of the Hobbs & Shaw producer deal would be anything other than the first dollar gross option that had been contained in [Moritz's] last producer deal, which was the FF8-10 [a]greement." (Italics omitted.)

The FAC also references the Fast & Furious contracts in various other ways. Specifically, Moritz alleges that "[i]t was always clearly and fully understood between the parties that [Moritz] would receive ... [Moritz's] customary credit and full financial compensation for producing Hobbs & Shaw," and that a proposal made by Universal after the parties had entered into an oral agreement was contrary "to what Moritz had received on all of the [Fast & Furious] films since approximately 2012 (and had received on many [Fast & Furious] films before that)." (Italics omitted.)

The FAC asserts breach of contract, breach of implied contract, and promissory fraud causes of action and seeks both damages and enforcement of the alleged oral agreement.

D. Appellants’ Motion to Compel Arbitration

Appellants moved to compel arbitration based on the arbitration clauses in the Fast & Furious contracts. Appellants’ motion first asked the court to compel arbitration of ...