United States District Court, N.D. California, San Jose Division
ORDER DENYING DEFENDANT'S PARTIAL MOTION TO DISMISS
[Re: ECF 39]
BETH LABSON FREEMAN, District Judge.
This case involves dispute over copyright. In 2011, Defendant WestEd and an entity called Schematic Media, Inc. ("SMI") entered into a subcontract. Plaintiff signed this subcontract as the owner of SMI. Plaintiff now contends that the contract fails to reflect the true intent of the parties, because the parties intended that Plaintiff individually, rather than SMI, would offer performance as the subcontractor. See Second Amended Complaint ("SAC") ¶ 17. Plaintiff therefore seeks to reform the contract to reflect this true intent.
Pursuant to Federal Rule of Civil Procedure 12(b)(1), Defendant seeks to dismiss Plaintiff's second and third causes of action for reformation because Plaintiff lacks standing to bring a claim for reformation of the subcontract. Relying on a California Supreme Court case from 1900, Mabb v. Merriman, Defendant argues that the Court cannot reform the contract in the manner Plaintiff seeks because the Court "can neither add additional parties nor substitute other parties for those already appearing upon the face of the writing." Mabb, 129 Cal. 663, 664 (1900). Plaintiff opposes, contending that when the writing fails to reflect the true intent of the parties, even when that failure includes a mistake as to the names of the parties to the agreement, the Court has the equitable power to reform the agreement.
The parties appeared for oral argument on January 29, 2015. Having reviewed the briefing and oral argument of the parties, the Court agrees with Plaintiff, and DENIES Defendant's motion, for the reasons set forth below.
Plaintiff holds copyright on a work entitled Voyage to Galapagos. In August 2014, Plaintiff registered a fictitious business entity called Schematic Media, with the date of commencement of that business listed as January 1, 2011. SAC ¶ 4.
In June 2011, WestEd entered into a subcontract with SMI. Plaintiff signed this subcontract as the owner of SMI. See SAC Exh. A at 1. The subcontract provided that the subcontractor's pre-existing intellectual property rights would remain the property of the subcontractor alone, and that the subcontractor would "have access to and the right to use all of the jointly developed intellectual property" arising from the venture. SAC ¶ 2.
Plaintiff contends that the subcontract fails to reflect the true intent of the contracting parties. SAC ¶ 13. He alleges that prior to the execution of the subcontract he informed Michael Timms, WestEd's Project Director and the "person responsible for making payments to the subcontractor, " SAC ¶ 15, that SMI did not exist and that he could not execute the subcontract as SMI. SAC ¶ 17. After informing Timms of these facts, Timms nonetheless instructed Plaintiff to execute the contract as written. See id.; see also SAC ¶ 47 ("In reliance on Timm's (sic) false representations, Plaintiff was deceived and misled into signing a written agreement that differed materially from the understanding of the parties."). Thereafter, WestEd made payments under the subcontract to Plaintiff individually. SAC ¶ 18.
Plaintiff therefore alleges that, unless the subcontract is reformed to reflect the true intent of the parties, he will suffer substantial prejudice, SAC ¶ 19, and seeks reformation of the contract under the theories of unilateral mistake, SAC ¶¶ 39-45, and misrepresentation. SAC ¶¶ 47-48.
II. LEGAL STANDARD
Pursuant to Rule 12(b)(1), a plaintiff must have the "irreducible constitutional minimum of standing" in order to bring suit, Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992), which means that the plaintiff "must have suffered or be imminently threatened with a concrete and particularized injury in fact that is fairly traceable to the challenged action." Id. Under California law, only an aggrieved party may bring a claim for reformation of a contract:
When, through fraud of mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party so aggrieved, so as to express that intention, so far as it can be done without prejudice to the rights acquired by third persons, in good faith and for value.
Cal. Civ. Code ...