Filed 3/3/21 Kidd v. Krave Group CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
MICHAEL KIDD, B299021
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC675143)
v.
KRAVE GROUP, LLC, et al.,
Defendants and
Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Terry A. Green and Cary H. Nishimoto, Judges.
Affirmed.
Abir Cohen Treyzon Salo, Boris Treyzon, David S.
Bederman and Cynthia A. Goodman for Plaintiff and Appellant.
Arent Fox, Richard D. Buckley, Jr., and George N. Koumbis
for Defendants and Respondents.
_______________________
Plaintiff Michael Kidd appeals from a judgment entered in
favor of defendants Krave Group, LLC (Krave), Charles Aksland,
Terry Karges, Wayne Rainey, and Richard Varner1 after the trial
court granted defendants’ motion for judgment on the pleadings
on the ground the action was barred by the two-year statute of
limitations for breach of an oral contract under Code of Civil
Procedure section 339, subdivision (1).2 Kidd, a motorcycle racing
professional, filed suit against defendants in 2017, alleging that
in 2014 the Krave defendants breached an agreement to enter
into a partnership with him to acquire a motorcycle racing series
and to convey to Kidd a percentage of the equity in the venture
that later became Krave.
Kidd contends on appeal the partnership agreement was
memorialized as a written nondisclosure agreement (NDA)
reached in connection with the parties’ efforts to acquire the
motorcycle racing series, and therefore the four-year statute of
limitations applicable to written contracts applies. Kidd argues
the trial court erred in refusing to treat the alleged oral promise
to grant Kidd an interest in Krave as parol evidence admissible
to construe the NDA, instead finding it constituted a separate
oral contract subject to the two-year limitations period. Kidd also
argues defendants are equitably estopped from asserting
California’s two-year statute of limitations barred his claims
because the Krave defendants drafted the NDA with a
Connecticut choice-of-law provision. We affirm.
1 We refer to the four individual defendants as the “Krave
defendants” and all defendants collectively as “defendants.”
2 All further undesignated statutory references are to the
Code of Civil Procedure.
2
FACTUAL AND PROCEDURAL BACKGROUND
A. Allegations in the First Amended Complaint3
1. Negotiations over acquisition of a motorcycle racing
series
As alleged in the operative first amended complaint, Kidd
is a former motorcycle racer who has been involved in
motorsports for several decades. He previously worked at the
American Motorcyclist Association (AMA) and Daytona
Motorsports Group (DMG) as a director and developer of
motorcycle races. As a result of his specialized knowledge about
the motorcycle racing industry, Kidd became aware that AMA
Pro Racing, a series of racing events owned by DMG, was in dire
financial straits, and DMG was interested in selling its rights to
the racing series. Starting in December 2012, Kidd began
searching for business partners to help him finance an
acquisition of the series. Because Kidd had a poor relationship
with individuals at DMG, he needed a business partner who
would act as the public face of the acquisition while Kidd
remained a silent partner.
On August 4, 2013 Kidd contacted Aksland, a longtime
acquaintance with connections to a motorcycle racing company
called Dorna. Kidd told Aksland he wanted to present Dorna
with a proposal under which Dorna would finance the purchase of
3 Because we accept the factual allegations of the complaint
as true in reviewing a motion for judgment on the pleadings
(York v. City of Los Angeles (2019) 33 Cal.App.5th 1178, 1193), we
do not consider the evidence described in detail by defendants in
their respondents’ brief (based on evidence presented in
connection with their summary judgment motion) because it is
outside the pleadings and not relevant to our review.
3
the rights to the Flat Track & Road Race Series, a division of
AMA Pro Racing. Aksland informed Karges, Rainey, and Varner
of Kidd’s plans, and the four defendants contacted Kidd and told
him they and their planned business entity Krave (which they
subsequently formed in 2014) were interested in partnering to
acquire the rights to the racing series.
On August 7 and 8, 2013 Kidd and the Krave defendants
entered into an NDA, drafted by Varner, to protect the parties’
confidential information.
2. The NDA
The NDA is attached as an exhibit to the first amended
complaint. The preface to the NDA stated the agreement was
entered into between “The Group” (defined to mean to Aksland,
Karges, Rainey, and Varner) and “KIDDCO” (defined to mean
Kidd).
The “Background” section of the NDA described the
purpose of the agreement as follows: “The Group and KIDDCO
are engaged in discussions regarding possible transactions
between KIDDCO and The Group regarding which the parties
need to exchange certain information to determine the viability of
the possible transactions and whether to continue their
discussions regarding the same (collectively herein the “Proposed
Transaction”)[.] In order to evaluate the Proposed Transaction,
KIDDCO and The Group have agreed, subject to the terms of this
Agreement, to exchange information concerning their respective
businesses, operations and capabilities and certain financial and
other information.”
Paragraph 1 of the NDA defined “Confidential Information”
very broadly to include, among other things, “any information of
the disclosing party concerning its business, operations or
4
capabilities or concerning its financial situation or prospects”;
“the organization or capital structure, financial performance,
business plans or initiatives or strategy of the disclosing party”;
any information generally regarded as confidential in the
industry or by the disclosing party; and any information that
would give the receiving party a competitive advantage.
In paragraph 2, entitled “THE GROUP’S Agreements”
(boldface and underscoring omitted), the Krave defendants
agreed “the Confidential Information disclosed by KIDDCO to
The Group hereunder will be used solely for the purpose of
evaluating the Proposed Transaction”; they would not disclose
the information to third parties without Kidd’s consent; and, “[i]n
the event that the Proposed Transaction is not consummated,”
they would not use the information for any purpose and would
destroy the information and any documents based on it. In
paragraph 3, Kidd agreed to identical obligations with respect to
his handling of confidential information received from the Krave
defendants.
In paragraph 4, entitled “ENFORCEMENT” (boldface and
underscoring omitted), the parties agreed “that the recovery of
damages may be inadequate to compensate the disclosing party
in the event of a breach of this Agreement by the receiving party,
and accordingly KIDDCO and The Group specifically agree that
the disclosing party will have the right to obtain injunctive relief
or special performance hereof. Nothing contained in this
paragraph, however, will prevent either party from pursuing any
remedies in addition to injunctive relief or specific performance,
including the recovery of damages.” Paragraph 6 provided that
unless and until the parties executed and delivered “a final
definitive agreement regarding the Proposed Transaction,”
neither party had any legal obligation to the other party “except
5
for the matters specifically agreed to herein,” and all parties
agreed they could at any time terminate their discussions
without any further obligation.
Paragraph 7.(b) provided the NDA would be “governed by
and construed and interpreted” under Connecticut law.
Paragraph 7.(c) stated the NDA “expresses the entire agreement
between the parties regarding the use and disclosure of
Confidential Information and supersedes any prior written or
oral understandings or agreements with respect thereto. No
representations, oral or written, modifying or contradicting the
terms of this Agreement have been made by either party. This
Agreement may not be amended, modified or cancelled except by
written agreement of the parties.”
Finally, Paragraph 7.(e) provided, “Notwithstanding any
past, present or future discussions or negotiations, or any past,
present or future oral or other commitments, understandings,
indications or approvals given by the management or other
representative of a party hereto, neither party shall be under any
obligation to enter into any future transaction(s). This
Agreement merely governs the exchange of Confidential
Information between the parties and no other agreement
(implied, imputed, actual or otherwise) is intended by this
Agreement. Any other agreement(s) shall be set forth in separate
documents entered into by and between the parties and neither
party shall be bound by the same until such time that the
agreements are duly and validly executed and delivered in final
form by all parties to be charged thereto.”
6
3. Varner’s oral promise of an ownership interest in
Krave
The first amended complaint alleges that on August 11,
2013 Kidd sent an email to Varner inquiring about Krave’s
financial status, the number of equity partners, and how the
equity would be split among the partners. Kidd and Varner then
spoke on the telephone, as follows: “On August 11, 2013, after
executing the NDA, [Kidd] and [d]efendant Varner had a
telephone call in which [d]efendant Varner offered [Kidd] an
ownership interest in [Krave]. Specifically, [d]efendant Varner
offered an ownership stake in the entity, valued between 8
percent and 12 percent. [Kidd] countered that he wished for an
equity stake closer to 15 percent. The parties agreed after an
acquisition that [Kidd] would have an equity stake somewhere
between 8 and 15 percent.”
On August 14, 2013, “in reliance on the ownership interest
promise from [d]efendants,” Kidd sent Varner an email
containing confidential information that would be material to the
acquisition of the rights to AMA Pro Racing, including that AMA
held a right of first refusal for any proposed sale by DMG of
rights to AMA Pro Racing.
4. Efforts to acquire AMA Pro Racing
During August and September 2013 Kidd worked with the
Krave defendants to acquire AMA Pro Racing. Kidd contacted
the president of AMA and the chairman of its board to win their
approval of an acquisition. Kidd also prepared specific directions
to guide the Krave defendants’ approach as to DMG based on his
inside knowledge, and he provided feedback on the Krave
defendants’ correspondence with DMG. In September 2013 Kidd
advised Varner to focus on acquiring the rights to only the Road
7
Race & Flat Track Series because Kidd believed DMG would
likely decline an offer for the entire AMA Pro Racing series. Kidd
also prepared a business plan for the Road Race & Flat Track
Series events, created a staffing plan, drafted due diligence
questions, proposed specific racetracks to be added to the series,
and provided the Krave defendants with information he had
gathered about sponsors who were dissatisfied with DMG’s
management of the races.
In January 2014 the Krave defendants advised Kidd that
they were in active negotiations with DMG. On March 14 Varner
advised Kidd that the Krave defendants had made an offer to buy
all the rights to AMA Pro Racing rather than just the Road Race
& Flat Track Series. On March 15 Aksland informed Kidd DMG
had declined the offer. The parties discussed next steps in the
wake of DMG’s rejection, including an alternative plan to
approach AMA about organizing a competing racing series, as
well as the possibility of approaching DMG again if AMA Pro
Racing’s financial performance further deteriorated.
On June 18, 2014 Kidd met with Varner in Varner’s office
in California. Varner advised Kidd the defendants were close to
closing a deal with AMA, and he affirmed the parties had an
agreement to make Kidd a part owner of Krave. On August 5
and 27 Varner reiterated that the Krave defendants were close to
reaching an agreement with AMA.
On September 3, 2014 AMA announced a deal with Krave
in which Krave acquired the rights to the AMA Pro Racing’s
“Road Race Series,” which Krave rebranded as “MotoAmerica.”
On September 19 Varner sent Kidd an email stating Kidd would
not be part of the new deal and would not receive an equity
interest in Krave. Varner asserted the parties’ partnership
agreement governed the acquisition of the rights to the entire
8
AMA Pro Racing series, and the agreement had lapsed after
DMG rejected the parties’ proposal to buy the entire series in
March 2014.
B. This Action
Kidd filed this action on September 7, 2017, alleging causes
of action for breach of contract, breach of the covenant of good
faith and fair dealing, specific performance, and intentional
interference with economic advantage. Defendants demurred to
the complaint, arguing all causes of action were time-barred
under section 339’s two-year statute of limitations for breach of
an oral contract. Defendants contended the complaint alleged
creation of an oral contract during Varner and Kidd’s August 11,
2013 call. Therefore, Kidd’s causes of action accrued no later
than September 19, 2014 when, as alleged, Varner emailed Kidd
to repudiate the agreement, and the action was untimely because
it was not filed within two years. In opposition, Kidd argued
Varner’s oral promise of an equity interest in Krave was not a
separate oral contract, but parol evidence that explained
ambiguities in the NDA’s remedies provision. Kidd also argued
that based on the Connecticut choice-of-law provision in the
NDA, his claims were timely under Connecticut’s six-year statute
of limitations for breach of contract.4 Kidd proposed he could
4 Under Connecticut law, both an action on a written
contract and an implied oral contract on which one party has
fully performed are governed by a six-year statute of limitations.
(See Conn. Gen. Stat. Ann. § 52-576, subd. (a); Bagoly v. Riccio
(Conn. App. Ct. 2007) 102 Conn.App. 792, 798-799.) A three-year
statute of limitations applies to an oral contract where neither
party has fully performed under the contract. (Conn. Gen. Stat.
Ann. § 52-581, subd. (a); Bagoly, at p. 799.)
9
amend the complaint to plead facts showing the parties’
contractual intent and establishing defendants’ business
connections with Connecticut. The trial court5 sustained the
demurrer as to all counts but granted leave to amend as to the
causes of action for breach of contract and intentional
interference with economic advantage.6
Kidd’s first amended complaint asserted causes of action
for breach of contract and intentional interference with economic
advantage. The amended pleading described the parties’ contract
as follows: “The parties had a written contractual relationship to
work jointly to acquire the rights to AMA Pro Racing, whether in
whole or in part: the preamble to the parties’ NDA envisioned
that [the parties] would work together by defining the ‘Proposed
Transaction’ as a joint endeavor between the parties.” Further,
“[d]efendants promised that in exchange for [Kidd’s] confidential
information, direction, and assistance in consummating the
transaction, [Kidd] would receive an ownership stake of between
8 and 15 percent of [Krave]. Defendants further agreed that in
the event of a breach of the NDA, they would compensate [Kidd]
with ‘damages’ amounting to an ownership stake of between 8
and 15 percent of [Krave].”
Defendants again demurred, arguing the amended
complaint was a sham pleading and Kidd’s claims were still
barred under the two-year statute of limitations applicable to oral
contracts. The trial court overruled the demurrer as to Kidd’s
5 Judge Terry A. Green ruled on defendants’ demurrers and
summary judgment motion.
6 As to Kidd’s claim for specific performance, the trial court
held Kidd could plead specific performance as remedy for breach
of contract, but not as a separate cause of action.
10
breach of contract cause of action and sustained the demurrer
without leave to amend as to the interference with economic
advantage cause of action.
On September 28, 2018 defendants moved for summary
judgment on the ground they were not contractually obligated to
transfer an equity interest in Krave to Kidd.7 The trial court
denied the motion, holding there were triable issues of fact
whether the Krave defendants’ purchase of a portion of AMA Pro
Racing and creation of a competing race series was based on
confidential information provided by Kidd under the NDA. The
court found the enforcement provisions of the NDA were
ambiguous, and parol evidence of an agreement for the Krave
defendants to provide at least a 12 percent stake in Krave was
admissible to determine whether Kidd could recover in specific
performance or damages for loss of the stake. The court
explained that Kidd was “permitted to sue for either (a) inclusion
in any deal that [the Krave d]efendants make, (b) destruction and
non-use of his information, or (c) damages for being excluded
from the deal.”
In its ruling the trial court determined California law
applied to the NDA, which was the position Kidd asserted in his
opposition brief (defendants argued Connecticut law applied).
The court explained defendants had not presented any facts
showing they or the transaction had a substantial relationship
with Connecticut. Further, as described in Kidd’s statement of
additional undisputed material facts in opposition to summary
judgment, Varner admitted in his 2018 deposition that the
7 Defendants did not assert a statute of limitations
argument.
11
inclusion of a Connecticut choice-of-law provision in the NDA had
been a mistake.
On February 24, 2019 (three weeks before the March 18,
2019 trial date) defendants filed a motion for judgment on the
pleadings, which at the court’s suggestion they styled as a motion
in limine.8 Defendants argued that under California law, Kidd’s
cause of action for breach of contract was time-barred because
Kidd’s claim “is packaged as one for breach of the written NDA,
but [Kidd’s] prayer for relief is to enforce the alleged oral promise
to provide [Kidd] with an ownership interest in [Krave].” At the
March 4, 2019 final status conference before Judge Green, Kidd’s
counsel clarified that Kidd was seeking specific performance of a
deal to get 12 to 15 percent of Krave stock, not damages, and
therefore the matter would proceed as a bench trial.
On the first day of trial (March 18), the trial court9 granted
defendants’ motion for judgment on the pleadings. In its written
ruling, the court held Kidd’s “breach of contract claim rests on
parol[] evidence following the NDA, specifically the oral promise
by Varner during a telephone call on [August 11, 2013] that after
an acquisition that plaintiff would have an equity stake of
somewhere between 8% [and] 15%.” The court relied on Laughlin
v. Haberfelde (1946) 72 Cal.App.2d 780, 785 (Laughlin), for the
proposition a contract partly in writing and partly oral is an oral
contract, and therefore “[p]arol[] evidence (i.e. evidence outside of
8 Defendants had filed an ex parte application seeking to
have their motion for judgment on the pleadings heard before
trial. The court denied the motion, but allowed the motion to be
heard as a motion in limine on the first day of trial.
9 Judge Cary H. Nishimoto presided over the trial, including
the motions in limine.
12
the four corners of a fully integrated agreement) . . . is governed
by the two[-]year [statute of limitation] for oral contracts . . . .”
Because Kidd alleged breach of the agreement on September 19,
2014, the complaint had to be filed no later than September 19,
2016, and the September 7, 2017 filing was untimely. On
May 23, 2019 the court entered judgment in favor of defendants.
Kidd timely appealed.
DISCUSSION
A. Standard of Review
“‘A judgment on the pleadings in favor of the defendant is
appropriate when the complaint fails to allege facts sufficient to
state a cause of action. [Citation.] A motion for judgment on the
pleadings is equivalent to a demurrer and is governed by the
same de novo standard of review.’” (People ex rel. Harris v. Pac
Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 777; accord,
York v. City of Los Angeles (2019) 33 Cal.App.5th 1178, 1193.)
“‘“We treat the pleadings as admitting all of the material facts
properly pleaded, but not any contentions, deductions or
conclusions of fact or law contained therein.”’” (Tarin v. Lind
(2020) 47 Cal.App.5th 395, 403-404; accord, Burd v. Barkley
Court Reporters, Inc. (2017) 17 Cal.App.5th 1037, 1042.) “If a
judgment on the pleadings is correct on any theory of law
applicable to the case, we will affirm it regardless of the
considerations used by the superior court to reach its conclusion.”
(Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 185; see Monsanto
Co. v. Office of Environmental Health Hazard Assessment (2018)
22 Cal.App.5th 534, 544-545 (Monsanto).)
13
B. Rules Governing the Interpretation of Written Contracts
“‘The rules governing the role of the court in interpreting a
written instrument are well established. The interpretation of a
contract is a judicial function. [Citation.] In engaging in this
function, the trial court “give[s] effect to the mutual intention of
the parties as it existed” at the time the contract was executed.
[Citation.] Ordinarily, the objective intent of the contracting
parties is a legal question determined solely by reference to the
contract’s terms.’” (Brown v. Goldstein (2019) 34 Cal.App.5th
418, 432 (Brown), quoting Wolf v. Walt Disney Pictures &
Television (2008) 162 Cal.App.4th 1107, 1125-1126 (Wolf).)
“Terms set forth in a writing intended by the parties as a
final expression of their agreement with respect to the terms
included therein may not be contradicted by evidence of a prior
agreement or of a contemporaneous oral agreement.” (§ 1856,
subd. (a); accord, Brown, supra, 34 Cal.App.5th at p. 432 [“‘The
court generally may not consider extrinsic evidence of any prior
agreement or contemporaneous oral agreement to vary or
contradict the clear and unambiguous terms of a written,
integrated contract.’”].) “‘Extrinsic evidence is admissible,
however, to interpret an agreement when a material term is
ambiguous.’” (Brown, at p. 432; see Pacific Gas & E. Co. v. G.W.
Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37, 39-40 (Pacific
Gas & E. Co.) [notwithstanding the plain and unambiguous
language on the face of a contract, if extrinsic evidence is
“relevant to prove a meaning to which the language of the
instrument is reasonably susceptible,” the extrinsic evidence may
be admitted to determine the contracting parties’ objective
intent].)
“When the meaning of the words used in a contract is
disputed, the trial court engages in a three-step process. First, it
14
provisionally receives any proffered extrinsic evidence that is
relevant to prove a meaning to which the language of the
instrument is reasonably susceptible. [Citations.] If, in light of
the extrinsic evidence, the language is reasonably susceptible to
the interpretation urged, the extrinsic evidence is then admitted
to aid the court in its role in interpreting the contract.
[Citations.] When there is no material conflict in the extrinsic
evidence, the trial court interprets the contract as a matter of
law.” (Wolf, supra, 162 Cal.App.4th at p. 1126; accord, Brown,
supra, 34 Cal.App.5th at pp. 432-433; Winet v. Price (1992)
4 Cal.App.4th 1159, 1165 (Winet).)
On appeal, a “trial court’s ruling on the threshold
determination of ‘ambiguity’ (i.e., whether the proffered evidence
is relevant to prove a meaning to which the language is
reasonably susceptible) is a question of law, not of fact.
[Citation.] Thus[,] the threshold determination of ambiguity is
subject to independent review.” (Winet, supra, 4 Cal.App.4th at
p. 1165; accord, Brown, supra, 34 Cal.App.5th at p. 433.) The
“ultimate construction placed upon the ambiguous language . . .
may call for differing standards of review, depending upon the
parol evidence used to construe the contract.” (Winet, at
pp. 1165-1166; accord, Brown, at p. 433.) Because we accept the
allegations of the complaint as true in reviewing the grant of a
motion for judgment on the pleadings, the extrinsic evidence is
not in conflict. Therefore, we independently construe the
contract. (Brown, at p. 433; Winet, at p. 1166.)
C. The Trial Court Properly Granted Judgment on the
Pleadings
On appeal, Kidd contends the four-year statute of
limitations for breach of a written contract (§ 337, subd. (a))
15
rather than the two-year limitations period for breach of an oral
agreement (§ 339, subd. (1)) applies to his contract claim because
the written NDA “expressly and implicitly created a de facto
partnership agreement,” allowing Kidd to sue for a percentage in
Krave as specific performance of the NDA. (Italics omitted.)
Kidd argues his oral agreement with Varner, under which he
would receive an equity interest in Krave “between 8 and 15
percent” upon the acquisition of AMA Pro Racing, is parol
evidence admissible to interpret the NDA and not, as the trial
court found, evidence of an oral contract or modification to the
written contract. Kidd’s argument is not persuasive.
As part of our analysis, we provisionally receive the parol
evidence (the alleged oral promise) and determine if the NDA is
“reasonably susceptible” to the interpretation advanced by Kidd.
(Wolf, supra, 162 Cal.App.4th at p. 1126; accord, Brown, supra,
34 Cal.App.5th at pp. 432-433.) Several provisions of the NDA
show it cannot reasonably be interpreted in light of the
extrinsic evidence as a de facto partnership agreement. The
NDA expressly stated the parties agreed to exchange confidential
information “[i]n order to evaluate the Proposed Transaction,”
but “unless and until a final definitive agreement regarding the
Proposed Transaction has been executed and delivered, neither
party will be under any legal obligation of any kind whatsoever
with respect to such a transaction as a result of this Agreement,
except for the matters specifically agreed to herein.” Further,
each party reserved the right to reject proposals made by the
other party with respect to the “Proposed Transaction” and to
terminate discussions “at any time without any further
obligation(s) except as herein provided.” And as discussed, the
parties explicitly agreed the NDA “merely governs the exchange
of Confidential Information between the parties and no other
16
agreement (implied, imputed, actual or otherwise) is intended by
this Agreement. Any other agreement(s) shall be set forth in
separate documents entered into by and between the parties and
neither patty shall be bound by the same until such time that the
agreements are duly and validly executed and delivered in final
form by all parties to be charged thereto.”
On appeal, Kidd argues that because the NDA does not
specify the scope of the “Proposed Transaction,” and the
disclaimers stating the parties had no obligations beyond
protection of the confidential information were subject to
exceptions for “matters specifically agreed to herein” and “as
otherwise provided herein,” the scope of the NDA is ambiguous.
Thus, Kidd asserts, parol evidence is admissible to support his
claim that at the time the parties entered the NDA, they
contemplated a joint acquisition of some or all of the AMA Pro
Racing series from DMG. This argument fails because even if the
parol evidence (the alleged oral promise) clarifies that the
“Proposed Transaction” was a partnership to acquire a racing
series, this clarification does not transform the NDA from an
agreement about the sharing of confidential information to a de
facto partnership agreement. Thus, the extrinsic evidence is not
admissible because it is not “relevant to prove a meaning to
which the language is reasonably susceptible.” (Winet, supra,
4 Cal.App.4th at p. 1165; see id. at p. 1167 [parol evidence
inadmissible to construe release of claims where release not
reasonably susceptible to proffered meaning]; Gerdlund v.
Electronic Dispensers International (1987) 190 Cal.App.3d 263,
273 [trial court erred in admitting evidence of employer’s oral
promises to sales representatives because written agreement was
not amenable to proffered meaning].)
17
Kidd also argues the NDA’s remedy provisions are
ambiguous because the document acknowledges in paragraph 4
that the recovery of damages may be inadequate in case of a
breach and therefore provides for recovery of specific
performance, but it fails to specify what specific performance the
disclosing party would be entitled to recover. Kidd argues parol
evidence of Varner’s later oral promise clarifies that Kidd was
entitled under the NDA to conveyance of an 8 to 15 percent
ownership interest in Krave upon the Krave defendants’ breach
of the NDA by using Kidd’s confidential information to
consummate a transaction that excluded him. The fallacy in
Kidd’s argument is that parol evidence showing that three days
after executing the NDA Varner offered Kidd an equity interest
in Krave in exchange for Kidd providing confidential information
material to acquisition of the rights to AMA Pro Racing does not
reasonably support an interpretation that the NDA—which
clearly stated any agreement other than relating to the exchange
of confidential information would need to be in a separate
executed document—was a de facto partnership agreement
granting Kidd an equity interest in Krave.
Had Kidd pursued a claim for breach of the disclosure
provisions of the NDA (instead of breach of a partnership
agreement), he could have argued for other specific performance,
for example, inclusion of Kidd in the deal defendants negotiated
using his confidential information (for MotoAmerica). But Kidd
elected to pursue a claim for breach of the NDA as a partnership
agreement. Because the NDA is not reasonably susceptible to the
interpretation urged by Kidd, the parol evidence is inadmissible,
and we do not reach the third step of interpreting the contract.
(Wolf, supra, 162 Cal.App.4th at p. 1126; see Brown, supra,
34 Cal.App.5th at pp. 432-433; Pacific Gas & E. Co., supra,
18
69 Cal.2d at pp. 37, 39-40 [extrinsic evidence may be used to
determine the parties’ objective intent only if the evidence is
“relevant to prove a meaning to which the language of the
instrument is reasonably susceptible”].)
It therefore follows that Kidd has alleged a subsequent oral
agreement subject to the two-year statute of limitations. The
Court of Appeal’s holding in McClain v. Rush (1989)
216 Cal.App.3d 18, relied on by defendants, is instructive. There,
the purchaser of real property sued the sellers for breach of
contract and fraud, alleging the water in the well on the property
was not potable. (Id. at p. 22.) The Court of Appeal affirmed the
trial court’s grant of defendants’ motion for judgment on the
pleadings, finding evidence of a promise by the seller as to the
quality of the water was inadmissible to interpret the written
sales agreement because there was no mention of the well in the
integrated agreement—comprised of a deposit receipt agreement
and escrow instructions—other than the well’s capacity. (Id. at
pp. 30-31.) Thus, the two-year limitations period applied to any
separate oral agreement regarding the quality of the water. (Id.
at p. 31.) Likewise, because the NDA is an integrated written
agreement, and the alleged parol evidence is not admissible to
interpret the agreement, the two-year statute of limitations for
breach of an oral contract barred Kidd’s breach of contract
claim.10
10 Laughlin, supra, 72 Cal.App.2d at page 785, relied on by
the trial court, does not inform our decision. In Laughlin, the
Court of Appeal concluded, “‘A contract partly in writing and
partly oral is, in legal effect, an oral contract. “It occurs where an
incomplete writing, or one expressing only a part of what is
meant, is, by oral words, rounded into the full contract”.’”
19
D. Defendants Are Not Equitably Estopped from Asserting
Their Statute of Limitations Defense
Kidd contends defendants are equitably estopped from
asserting California’s two-year statute of limitations barred his
breach of contract claim because the choice-of-law provision of the
NDA, which Varner drafted, stated the NDA would be governed
by Connecticut law, which provides for a six-year statute of
limitations on breach of contract claims. Kidd’s attorney first
raised his equitable estoppel argument at the hearing on
defendants’ motion for judgment on the pleadings, arguing Kidd
did not know the Connecticut choice-of-law provision in the NDA
was a mistake until after he filed his complaint.11 Kidd’s
contention lacks merit.
Laughlin did not involve a statute of limitations issue. Rather,
the issue on appeal was only whether the plaintiff had
sufficiently alleged the existence of a partnership agreement on
terms that were not set forth in a written “preliminary
agreement” between the parties. As discussed, the NDA was an
integrated agreement concerning the sharing of confidential
information. Thus, the later oral agreement to form a
partnership was a separate agreement subject to the two-year
statute of limitations applicable to oral contracts.
11 Kidd argued at the hearing that California law should
apply to interpretation of the NDA but defendants should be
equitably estopped from relying on the California statute of
limitations because of their inclusion of the Connecticut choice-of-
law provision in the NDA. When the court asked Kidd’s attorney
what connection the parties had to Connecticut, Kidd’s attorney
responded, “None.” On appeal, Kidd contends he did not know
the inclusion of the choice-of-law provision was a mistake until
Varner admitted this during his 2018 deposition.
20
“‘[A] defendant may be equitably estopped from asserting a
statutory or contractual limitations period as a defense if the
defendant’s act or omission caused the plaintiff to refrain from
filing a timely suit and the plaintiff’s reliance on the defendant’s
conduct was reasonable.’” (Wind Dancer Production Group v.
Walt Disney Pictures (2017) 10 Cal.App.5th 56, 79 (Wind Dancer);
see Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 383 [“‘“One
cannot justly or equitably lull his adversary into a false sense of
security, and thereby cause his adversary to subject his claim to
the bar of the statute of limitations, and then be permitted to
plead the very delay caused by his course of conduct as a defense
to the action when brought.”’”].) “‘Generally speaking, four
elements must be present in order to apply the doctrine of
equitable estoppel: (1) the party to be estopped must be apprised
of the facts; (2) he must intend that his conduct shall be acted
upon, or must so act that the party asserting the estoppel had a
right to believe it was so intended; (3) the other party must be
ignorant of the true state of facts; and (4) he must rely upon the
conduct to his injury.’” (May v. City of Milpitas (2013)
217 Cal.App.4th 1307, 1338 (May), quoting Driscoll v. City of Los
Angeles (1967) 67 Cal.2d 297, 305.) “The defendant’s statement
or conduct must amount to a misrepresentation bearing on the
necessity of bringing a timely suit; the defendant’s mere denial of
legal liability does not set up an estoppel.” (Lantzy, at p. 384,
fn. 18; accord, May, at p. 1338.) “‘“It is not necessary that the
defendant acted in bad faith or intended to mislead the plaintiff.
[Citations.] It is sufficient that the defendant’s conduct in fact
induced the plaintiff to refrain from instituting legal
proceedings.”’” (Wind Dancer, at p. 79; accord, Lantzy, at p. 384.)
“‘“Estoppel must be pleaded and proved as an affirmative
bar to a defense of statute of limitations.”’” (May, supra,
21
217 Cal.App.4th at p. 1337.) “‘“‘[W]hether an estoppel exists—
whether the acts, representations or conduct lulled a party into a
sense of security preventing him from instituting proceedings
before the running of the statute, and whether the party relied
thereon to his prejudice—is a question of fact and not of law.’”’”
(Wind Dancer, supra, 10 Cal.App.5th at p. 79; accord, Holdgrafer
v. Unocal Corp. (2008) 160 Cal.App.4th 907, 925.) Because Kidd
did not plead facts supporting estoppel, instead first raising the
issue at the hearing on the motion of judgment on the pleadings,
we construe his argument on appeal as a request to amend the
complaint to allege equitable estoppel. (May, at p. 1339.)
“Whether a motion for judgment on the pleadings should be
granted with or without leave to amend depends on ‘whether
there is a reasonable possibility that the defect can be cured by
amendment . . . .’ [Citation.] When a cure is a reasonable
possibility, the trial court abuses its discretion by not granting
leave to amend and a reviewing court must reverse.” (Mendoza v.
Continental Sales Co. (2006) 140 Cal.App.4th 1395, 1402; see
Monsanto, supra, 22 Cal.App.5th at p. 545; Kempton v. City of
Los Angeles (2008) 165 Cal.App.4th 1344, 1348 [“Where a
complaint could reasonably be amended to allege a valid cause of
action, we must reverse the judgment.”].) “‘The plaintiff has the
burden of proving that [an] amendment would cure the legal
defect, and may [even] meet this burden [for the first time] on
appeal.’” (Sierra Palms Homeowners Assn. v. Metro Gold Line
Foothill Extension Construction Authority (2018) 19 Cal.App.5th
1127, 1132; see Mendoza, at p. 1402.)
As a threshold matter, even if Kidd could enforce the
Connecticut choice-of-law provision based on equitable estoppel,
he has not explained why the NDA’s choice-of-law provision
applied to the subsequent oral agreement. Thus, equitable
22
estoppel cannot salvage his claim for the Krave defendants’
breach of the later oral agreement for an equity stake in the
partnership.
Moreover, even if Kidd could show he believed the choice-
of-law provision in the NDA applied to the later oral agreement,
Kidd has not alleged (or shown that he can allege) that the
mistaken inclusion of the Connecticut choice-of-law provision was
an act intended to induce Kidd to sit on his rights or that Kidd
had a right to believe the inclusion of the provision was intended
to delay him from filing suit. (May, supra, 217 Cal.App.4th at
p. 1338.)12 Further, Kidd has not alleged or suggested inclusion
of the choice-of-law provision constituted a misrepresentation or
that Kidd reasonably relied on the provision. (May, at p. 1338.)
To the contrary, the parties and their counsel were free to
evaluate the choice-of-law provision and to advance legal
arguments whether Connecticut or California law controlled
disputes arising from the NDA. It is questionable the
Connecticut choice-of-law provision would apply to Kidd’s breach
12 The three estoppel cases cited by Kidd are distinguishable.
In Sumrall v. City of Cypress (1968) 258 Cal.App.2d 565, 570, the
defendant’s insurer asked the plaintiff to delay filing a personal
injury action to await a medical evaluation the insurer knew
would not arrive within the limitations period, and the plaintiff
relied on the misrepresentation. In Kunstman v. Mirizzi (1965)
234 Cal.App.2d 753, 756-758, the appellate court rejected the
plaintiff’s claim his attorney was “lulled into a false sense of
security” by ongoing settlement negotiations where the plaintiff
failed to allege any affirmative promises made by the defendant
insurer as to a settlement by which plaintiff was induced to delay
filing her complaint. City and County of San Francisco v. Grant
Co. (1986) 181 Cal.App.3d 1085 did not concern equitable
estoppel as applied to a statute of limitations defense.
23
of contract claim given the parties’ lack of a connection with
Connecticut, as conceded by Kidd’s counsel at the hearing. As
Kidd alleged in its first amended complaint, Krave is a Delaware
limited liability company with its principal place of business in
California; the Krave defendants are citizens of the State of
California; and Kidd is a citizen of the State of Texas.
Kidd contends on appeal he can allege “facts clarifying the
nature of his understanding about the Connecticut statute of
limitations.” But Kidd’s equitable estoppel argument fails
principally because he has not alleged defendants engaged in
conduct that induced him to refrain from filing suit. Elaboration
of Kidd’s understanding of the choice-of-law provision in the NDA
cannot plausibly satisfy Kidd’s burden of alleging he was
reasonably induced to refrain from timely suing defendants for
an ownership interest in Krave.13
13 Kidd also requests leave to amend to allege the NDA’s
requirement that future business deals be in separate writings
was intended to refer only to the Krave defendants’ development
of a reality television series about motorcycle racing because Kidd
did not want the partnership agreement to include the reality
television series. But the statement in the NDA that “[a]ny other
agreements shall be set forth in separate documents” is not
reasonably susceptible to Kidd’s construction that only
agreements about a reality television series had to be in separate
written agreements. And even if Kidd’s interpretation were
reasonable, it would not turn an agreement about the sharing of
confidential information into a partnership agreement.
24
DISPOSITION
The judgment is affirmed. Defendants are to recover their
costs on appeal.
FEUER, J.
We concur:
PERLUSS, P. J.
SEGAL, J.
25