Musero v. Creative Arts Agency

California trial court dismisses, with leave to amend, plaintiff screenwriter’s breach of implied-in-fact contract and breach of implied covenant of good faith and fair dealing claims against his former talent agency, but denies dismissal of his breach of fiduciary duty claims. 

Plaintiff John Musero sued his former talent agency, Creative Arts Agency, and his agents, Andrew Miller and Leah Yerushalaim, based on what he alleged was CAA’s mishandling of his idea for a television show that drew upon Musero’s experience as a former U.S. attorney.  Musero alleged that instead of properly shopping the show concept, CAA redeveloped and “packaged” it with producer Jerry Bruckheimer and CAA writer client Sascha Penn without Musero’s knowledge or permission, and they sold the series, titled Main Justice, to CBS, thereby guaranteeing CAA’s back-end profit participation in the show’s success through “packaging fees.”  Musero brought claims for breach of contract, breach of implied covenant of good faith and fair dealing, and breach of fiduciary duty, and he sought punitive damages against all defendants in California Superior Court. 

Defendants sought dismissal of all claims. The trial court dismissed, with leave to amend, plaintiff’s breach of contract and breach of implied covenant of good faith and fair dealing claims; granted defendants’ motion to strike punitive damages against all defendants with regard to those two causes of action, but denied defendants’ motion for the breach of fiduciary duty claim against Musero’s agents Miller and Yerushalaim; and permitted Musero to amend his complaint as regards CAA’s corporate liability for punitive damages.

With regard to Musero’s breach of contract claim, the court looked to the standards set forth in Desny v. Wilder (1956) for an implied contract regarding a movie/show concept, which requires allegations that (1) plaintiff disclosed his ideas to defendant; (2) plaintiff clearly conditioned his disclosure upon defendant’s agreement to pay for it if used; (3) defendant voluntarily accepted the disclosure, knowing the condition upon which it was made (i.e., defendant must have had an opportunity to reject the disclosure); and (4) defendant actually used plaintiff’s ideas rather than their own ideas or ideas from other sources and those ideas had value. 

Defendants argued that Musero failed to allege that he disclosed the idea for the television series on the condition that defendants pay for the idea if it were used.  Musero responded that as defendants were his talent agents, there was an implied agreement that agents will use the work given to them by their clients to secure compensation for those clients.  The court determined that Musero’s general allegations regarding the client-agent relationship did not overcome Desny’s requirement of “clearly condition[ing]” the disclosure of his idea on defendants’ agreement to pay for it. 

With regard to the claim for breach of implied covenant of good faith and fair dealing, the court held that Musero had failed to plead the substance of the underlying contract’s relevant terms.  Musero could not rely on the existence of an implied contract under Desny, and while Musero pleaded another “contract” with defendants, he did not allege the terms of that contract or how defendants’ actions violated the implied covenant of good faith and fair dealing attendant to it.

Nevertheless, the court denied the motion to dismiss Musero’s breach of fiduciary duty claim.  While defendants complained that it was too vague, the court noted that the complaint “alleges in detail the violations of trust and confidence” by Miller, Yerushalaim and CAA sufficient to apprise defendants of Musero’s charges.  

Finally, defendants sought to strike Musero’s request for punitive damages, arguing that the alleged conduct did not meet the “despicable conduct” standard for imposition of punitive damages and that punitive damages simply weren’t available as a matter of law for breach of contract claims.  Specifically, CAA argued that plaintiff had failed to allege that it had ratified or condoned the actions of its individual agents, nor did Musero allege that Miller and Yerushalaim had a management position such that their actions carried the imprimatur of the company.  The court agreed with CAA and found that Musero had failed to state a prima facie case for punitive damages against CAA.  As to the individual defendants, however, the court held that Musero’s allegations of “a special relationship of trust and confidence that an agent owes to a client” combined with “the oppressive, if not fraudulent violation of those obligations through [d]efendants’ wanton self-dealing” properly grounded a claim for punitive damages. 

Musero has until Aug. 26 to amend his complaint to reassert his breach of contract and breach of implied covenant of good faith and fair dealing claims, and to add allegations regarding CAA’s ratification of its agents’ purportedly bad acts to enable him to seek corporate liability for punitive damages. 

Summary prepared by Linna Chen and Erin Smith Dennis.