Filed 7/8/14 Anaheim Ducks Hockey Club v. DS Waters of America CA4/3




                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.


              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                 DIVISION THREE


ANAHEIM DUCKS HOCKEY CLUB,

     Plaintiff and Appellant,                                          G048849

                      v.                                               (Super. Ct. No. 30-2012-00563336)

DS WATERS OF AMERICA, INC.,                                             OPINION

     Defendant and Respondent.


                   Appeal from a judgment of the Superior Court of Orange County, Franz E.
Miller, Judge. Reversed in part and affirmed in part.
                   Jerome M. Jackson for Plaintiff and Appellant.
                   Law Offices of Geoffrey Long, Geoffrey Long; Seyfarth Shaw, Eugene S.
Suh and James M. Harris for Defendant and Respondent.


                                             *               *               *
              Plaintiff and cross-defendant Anaheim Ducks Hockey Club, LLC (the
Ducks), appeal from the judgment entered after a bench trial on the Ducks’ complaint and
cross-complaint of defendant and cross-complainant DS Waters of America, Inc. (DS).
The trial court had entered judgment in favor of DS on the Ducks’ complaint for breach
of contract and in favor of the Ducks on DS’s cross-complaint for breach of the same
contract. The Ducks contend this was error because the court’s finding that the Ducks’s
breaches of the sponsorship agreement between it and DS were not material meant DS’s
failure to perform under the contract was not excused. We agree and reverse that part of
the judgment on the Ducks’s complaint in favor of DS and order the trial court to enter
judgment in favor of the Ducks. In all other respects, the judgment is affirmed.


                     FACTS AND PROCEDURAL BACKGROUND


              In 2008, the parties entered into a Sponsorship Agreement (agreement),
effective from August 1, 2008 to June 30, 2011. In exchange for a sponsorship fee, the
agreement gave DS “the right to place and staff one (1) table on the Plaza Level of the
Facility at each public event,” and granted DS “the right to be the provider of five-gallon
water service to the Ducks, the Facility and the Practice Facility and coffee service to the
employees of the Ducks, the Facility and the Practice Facility.”
              The agreement also provided that whenever a party is in default for failing
“to perform any material obligation in a timely manner,” “the non-defaulting party shall
deliver written notice specifying the default to the defaulting party,” giving the defaulting
party 30 days to cure the default. If the defaulting party fails to comply, the non-
defaulting party may terminate the agreement and “accelerate the payment of and bring
[a]n action to collect all installments of the [s]ponsorship [f]ee . . . payable through the
[t]ermination [d]ate,” i.e., June 30, 2011, regardless of the date of default.



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              DS paid the sponsorship fee for the first year. In 2009, the parties
attempted to renegotiate the agreement but the agreement was never modified or
amended. DS did not pay the sponsorship fees for the second or third years.
              In both October and December 2010, the Ducks sent DS a notice of default
for nonpayment of the second year sponsorship fee and a notice of termination. The
Ducks thereafter sued DS for breach of written contract, alleging that as a result of DS’s
nonpayment of the sponsorship fees for the second and third years, it was damaged in the
amount of the unpaid fees.
              DS answered and filed a cross-complaint alleging, among other things, the
Ducks’s material breaches of the agreement excused DS from its contractual obligations.
DS alleged the Ducks breached these provisions by failing to: (1) permit DS to place and
staff a promotional table on the Plaza level at all public events (tabling provision); (2)
give DS “the exclusive right to sell all coffee and coffee-related products at Honda Center
concession stands” (coffee exclusivity provision); and (3) allow DS “the right to be the
provider of 5-gallon water service and coffee service to the . . . Ducks.”
              After a four-day bench trial, the court orally issued its findings and
decision. On appeal, both parties focus on the tabling provision and “the right to be the
exclusive provider of coffee service (coffee and coffee-related products) to the Honda
Center concession stands.” We shall as well.
              The court found a breach of the tabling provision because the Ducks did not
allow DS to place a table on the Plaza level at every event, sometimes relegating DS to
the Terrace level instead. It noted that “[b]y one estimate, it was something like 16 out of
50 times.”
              As to the coffee exclusivity provision, the court ruled that granting DS the
right “to be the provider of . . . coffee service” (italics added) instead of “a” provider
indicates “exclusivity.” Additionally, the provision was ambiguous because it could be



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construed as giving DS the exclusive right to provide coffee service to “just employees of
the Ducks and then, in general, to the facility and the practice facility or to the employees
of each of those entities[.]” It thus construed the provision against the Ducks, whom it
deemed to be the drafters of the agreement.
              The court then considered whether these breaches were material. It
examined “the conduct and behavior of the parties,” observing DS never complained
about either breach by the Ducks, nor was it ever “concerned about whatever technical
breaches there might have been.” The court cited the provision in the agreement that “if
you think there’s a default . . . , you got to give written notice,” which “[t]hey never did”
because, in the court’s opinion, “they never thought that the Ducks were in material
default.” Rather, the court believed DS had “tried to renegotiate [the] contract because
the numbers weren’t working out right for [it].” It was “paying a whole lot of money on
this contract and [was] not getting back what [it] expected.” The fact that Aramark, the
third-party concessionaire operating the concession stands at the Honda Center,
purchased 75 percent of its coffee and coffee-related products from DS further
“support[ed] the inference . . . this breach was not a material breach.”
              The court concluded “the Ducks failed to perform everything . . . that was
their responsibility to perform as a condition precedent to their right to payment under the
contract” and that “with regards to the cross-complaint, that the breaches . . . claimed
by . . . [DS] were not material breaches, and therefore, they are not entitled to damages.
It ordered the Ducks to prepare a judgment stating neither party had proven their case.
              The record does not reflect either party requested a written statement of
decision. Nor does it show the parties stipulated that the reporter’s transcript would serve
as the statement of decision. Nevertheless, the judgment prepared by the Ducks reads,
“After hearing the evidence, and entertaining oral argument, the Court orally rendered its
Statement of Decision” and later DS filed and served a notice of entry of judgment



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stating, “after hearing the evidence and entertaining oral argument, [the court] rendered a
Statement of Decision on [the date of the oral hearing].”


                                       DISCUSSION


1. Applicability of Implied Findings Doctrine and Standard of Review
              We first address DS’s contention that because no statement of decision was
requested or prepared, the doctrine of implied findings applies. Although this is a correct
principle of law (see In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133-1134),
the fact no written statement of decision was prepared does not mean one does not exist.
              DS’s challenge to the Ducks’s statement the court “‘issued a Statement of
Decision from the bench’” ignores the wording of both the judgment and notice of entry
of judgment indicating respectively that the court had “orally rendered its Statement of
Decision” and “rendered a Statement of Decision on [the date of the oral hearing].”
Because DS was the one who filed and served the notice of entry of judgment embracing
the existence of an oral statement of decision rendered on the date of the oral hearing, it is
bound by its admission. (Valerio v. Andrew Youngquist Construction (2002) 103
Cal.App.4th 1264, 1271 [“admission in the pleadings forbids the consideration of
contrary evidence”]; Thomas v. Gordan (2000) 85 Cal.App.4th 113, 118 [judicial
estoppel prevents party from taking contrary positions in the trial and appellate courts].)
              Further, as noted by two other cases cited by DS, even if the court’s oral
decision did not constitute an official statement of decision, it “may be used on appeal to
discover the grounds for the judgment” (Tyler v. Children’s Home Society (1994) 29
Cal.App.4th 511, 526, fn. 7; see Tusher v. Gabrielsen (1998) 68 Cal.App.4th 131, 139,
141 [“verbatim transcript of the court’s comments” used “to understand the trial court’s
reasoning in resolving the disputed issues”]) and “for the purpose of discovering the



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process by which [the judge] arrived at his conclusion[]” (Henderson v. Fisher (1965)
236 Cal.App.2d 468, 472).
              In any event, we agree with DS that the court’s findings of fact, and any
implied findings, should be reviewed for substantial evidence. (Apex LLC v. Sharing
World, Inc. (2012) 206 Cal.App.4th 999, 1009.) We review legal issues under a de novo
or independent standard. (Ibid.)


2. Judgment on the Complaint
              “‘[I]n contract law a material breach excuses further performance by the
innocent party. [Citations.]’ [Citations.] ‘Normally the question of whether a breach of
an obligation is a material breach, so as to excuse performance by the other party, is a
question of fact.’” (Plotnik v. Meihaus (2012) 208 Cal.App.4th 1590, 1602-1603.)
Contrary to DS’s representation throughout its brief, the court did not find the Ducks’s
breaches were material. It specifically stated several times that they were not. Because
the breaches were not material, DS was not excused from paying the sponsorship fees for
the second and third years.
              The trial court found, however, that the Ducks were not entitled to recover
damages because it failed to perform everything it was required to do under the contract.
This was error. Although generally “[t]he plaintiff must be free from substantial default
in order to avail [itself] . . . of the remedies for the defendant’s breach” (1 Witkin,
Summary of Cal. Law (10th ed. 2005) Contracts, § 848, p. 953; see Murray’s Iron Works,
Inc. v. Boyce (2008) 158 Cal.App.4th 1279, 1291-1292 [substantial performance under
contract sufficient to allow the plaintiff to recover for breach by the defendant]), the
defendant, may, by accepting further performance from the breaching party, indicate it
has waived the breach (1 Witkin, supra, Contracts, §§ 856, 857, pp. 943-944).




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              Here, the court not only determined that the Ducks were free from
substantial default but also that DS had essentially waived any breach because it never
complained about them nor provided written notice under the terms of the contract. The
record supports those findings. Beverly Alterman, DS’s sales manager during the
relevant time frame, conceded that neither she nor anyone else at DS had provided the
Ducks with any written notice of default for failing to provide DS with a promotional
table on the Plaza level or violating DS’s purported exclusive right to sell all coffee and
coffee-related products at the Honda Center. She also admitted DS never made any
written complaint of any kind whether by e-mail, letter, fax, or memorandum.
              Alterman testified she had complained about the tabling and coffee sales
issues in a meeting held in October 2009. But a former Ducks employee who attended
the meeting also testified no such complaints were made and that Alterman’s focus was
on how to get more people to sign up for DS products because providing a person to staff
the table at the Honda center was expensive. As to coffee sales, the former Ducks
employee testified Alterman did not protest about exclusivity but that Aramark was not
purchasing enough coffee from DS. The same is true of a subsequent meeting, with
Alterman claiming she raised the issues, and former Ducks employees attending the
meeting testifying that Alterman only complained that tabling rights were too expensive
and not working out for DS. DS wanted to back out of the contract but the Ducks would
not allow that. The Ducks were willing, however, to consider additional sponsorship
elements to help DS improve sales.
              In concluding the Ducks’s breaches were not material, the court found the
Ducks’s witnesses more credible. On a substantial evidence review, we may not reweigh
this credibility determination or reweigh the evidence but must view the evidence and
draw inferences in the light most favorable to the judgment. (Do v. Regents of the
University of California (2013) 216 Cal.App.4th 1474, 1492.) Under this standard,



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substantial evidence supports the court’s findings. Consequently, the judgment is
reversed with directions to the trial court to enter judgment in favor of the Ducks.


                                      DISPOSITION


              The judgment is reversed with directions to enter judgment in favor of
appellant Anaheim Ducks Hockey Club. Appellant shall recover its costs on appeal.




                                                 RYLAARSDAM, ACTING P. J.

WE CONCUR:



ARONSON, J.



THOMPSON, J.




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