PageMasters, Inc. v. Autodesk, Inc.

Filing 22

ORDER granting Dft Autodesk Inc's 10 Motion to Dismiss PageMaster's Complaint and the complaint is dismissed with prejudice. The Clerk of Court is directed to enter JUDGMENT in favor of dft Autodesk, Inc. and to terminate the case. Signed by Judge Robert C Broomfield on 3/30/2009. (LAD)

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WO

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

PageMasters, Inc., Plaintiff, vs. Autodesk, Inc., Defendant.

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No. CV-08-00553-PHX-RCB ORDER

This lawsuit is the latest attempt by plaintiff PageMasters, Inc. to obtain "several million dollars" in royalty payments which it believes Océ-Technologies, B.V. ("Océ"), its former licensee and a non-party, owes it. See Co. (doc. 1) at 3, ¶ 10. That purported

obligation is based upon a Software Distribution Agreement entered into more than a decade ago, in 1997, between PageMasters and Océ ("Océ Agreement"). Currently pending before the court is a motion

to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) by defendant, Autodesk, Inc. (doc. 10). The court is intimately familiarity with

the history of this litigation having presided over not one, but

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two, prior closely related lawsuits.1

See

Océ-Technologies, B.V.

v. PageMasters, Inc., No. CIV 04-0557-PHX-RCB ("PageMasters I"); and PageMasters, Inc. v. Océ-Technologies, B.V., No. CIV 05-1519PHX RCB ("PageMasters II"). Given that familiarity, and the

straightforward issues which Autodesk's motion raises, oral argument will not assist the court. Therefore, the court denies See Mahon v. Credit

the parties' requests for oral argument.

Bureau of Placer County, Inc., 171 F.3d 1197, 1200 (9th Cir. 1999). Background I. Scope of Record Before outlining the facts, the court must decide which documents it may properly consider on this motion to dismiss. Ordinarily in ruling on a Rule 12(b)(6) motion, such as Autodesk's, a court may not consider matters beyond the complaint. See Corrie

v. Caterpillar, Inc., 503 F.3d 974, 979-980 (9th Cir. 2007) (internal quotation marks and citation omitted)("In general, the focus of any Rule 12(b)(6) dismissal . . . is the complaint.") In the present case, however, both parties are relying upon documents other than the complaint. The court must therefore determine

whether it may properly consider any of those documents without converting this motion into one for summary judgment. See Lee v.

City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (internal quotation marks and citation omitted) ("[A] court may consider material which is properly submitted as part of the complaint on a motion to dismiss without converting th[at] motion . . . into a
Indeed, this court's "familiarity with the transaction and the arguments raised in [the] instant case," was the primary reason for transferring the present action from the Honorable Neil V. Wake to this court. Order (doc. 21) at 5:16-17.
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motion for summary judgment.") 1. Incorporation by Reference

Both parties heavily rely upon the Océ Agreement and the March 2000 Asset Purchase Agreement ("APA") between PageMasters and Buzzsaw.2 Unquestionably those two agreements form the basis for

PageMasters' claims herein, and although the complaint mentions both, neither is attached thereto. Additionally, despite the fact

that Autodesk is requesting the court to take judicial notice of a number of documents, that request does not include these two agreements.3 Nonetheless, as the incorporation by reference

doctrine permits, the court will consider the Océ Agreement and the APA on this motion to dismiss. See U.S. v. Ritchie, 342 F.3d 903,

908 (9th Cir. 2003) (citations omitted) ("Even if a document is not attached to a complaint, it may be incorporated by reference into a complaint if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim."); see also Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (internal quotation marks and citations omitted) (incorporation by reference doctrine allows for consideration of "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff's] pleading[]"). Likewise, the court will "treat such a document[s]

After the closing of that APA, Buzzsaw "merged into Autodesk[.]" Co. (doc. 1) at 2, ¶ 8. Thus, Autodesk is the successor-in-interest to Buzzsaw. To simplify matters, both companies will be referred to throughout as Autodesk. Autodesk did attach those two agreements to its RJN as exhibit A and B respectively, but specifically limited its request for judicial notice to exhibits C-O thereto. RJN (doc. 11), at 2:2-3. Autodesk correctly implies, however, as discussed above, that the court may properly consider those two agreements based upon the incorporation by reference doctrine. See Mot. (doc. 10) at 3, n. 2.
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as part of the complaint, and . . . assume that [their] contents are true for purposes of [this] motion to dismiss under Rule 12(b)(6)." See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006)

(internal quotation marks and citation omitted). 2. Request for Judicial Notice

Because the 13 filings from PageMasters' related lawsuits and arbitration are a matter of public record, Autodesk contends that the court can properly take judicial notice of their "existence[.]" Autodesk's Request for Judicial Notice ("RJN") (doc. 11) at 2-3. The court may also take judicial notice of "certain arguments and statements made" in those filings, according to Autodesk, because they are "readily verifiable . . . and their existence cannot be subject to any dispute because they were made by a party to the current action in a prior related lawsuit." 3:19-21. Id. at 3:1-2; and

Tellingly, PageMasters did not respond to this RJN.

Perhaps because it, too, is relying upon some of those prior filings.4 Pursuant to Fed. R. Evid. 201, a court may "take judicial notice of matters of public record and consider them without converting a Rule 12 motion into one for summary judgment." U.S.

v. 14.02 Acres of Land, 530 F.3d 883, 894 (9th Cir. 2008) (internal quotation marks and citation omitted). Pleadings and orders in

other actions are matters of public record, and hence properly the subject of judicial notice. See, e.g., Reyn's Pasta Bella, LLC v.

Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir. 2006) (taking

4 PageMasters goes so far as to "incorporate" into its Response this court's "Undisputed Facts" as set forth in PageMasters II, 2006 WL 753164 (RJN (doc. 11), exh. K thereto). See Pl. Resp. (doc. 17) at 2.

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judicial notice, as a matter of public record, "pleadings, memoranda, expert reports, etc., from [earlier] litigation[,]" which were thus "readily verifiable"); Kourtis v. Cameron, 419 F.3d 989, 994 n.2 (9th Cir. 2005) (citation omitted) ("court records from related proceedings can be taken into account without converting a motion to dismiss into a summary judgment motion[]"), overruled on other grounds, Taylor v. Sturgell, ___ U.S. ___, 128 S.Ct. 2161, 171 L.Ed.2d 155 (2008). By its silence, and the fact that it is also relying in part upon those prior court filings, the court assumes that PageMasters is not opposing Autodesk's RJN. Accordingly, the court grants

Autodesk's RJN as to exhibits C-O attached thereto and will consider those exhibits to the extent necessary to resolve this motion, as well as the Océ Agreement and the APA. It is only

taking judicial notice of those prior filings to show, for example, that a prior proceeding occurred or that a certain argument or position was asserted therein. See, e.g., Faurie v. Berkeley

Unified School District, 2008 WL 820682, at *2 n. 3 (N.D.Cal. March 26, 2008) (taking judicial notice of pleadings to "see what arguments Defendants advanced in" another court and what court ruled); Mitchell v. Branham, 2008 WL 3200666, at *8 (S.D.Cal. Aug. 5, 2008) ("[d]ocuments that are part of the public record may be judicially noticed to show . . . that a judicial proceeding occurred or that a document was filed in another court case[]"). Autodesk is not requesting that the court take judicial notice of factual findings made by other courts or the arbitrator, Mot. (Doc. 10) at 1, n.1; and indeed, the court could not do that. See

Mitchell, 2008 WL 3200666, at *8 (citations omitted) ("[A] court -5-

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may not take judicial notice of findings of facts from another case.") The court may consider the prior court filings, the Océ

Agreement and the APA without converting this motion to one for summary judgment. See Nunez v. Idaho Atty. Gen., 2009 WL 484431,

at *3 (D.Idaho Feb. 26, 2009) (citation omitted) ("A court may look beyond the complaint to matters of public record, and doing so does not convert a motion for . . . dismissal into a motion for summary judgment.") 3. PageMasters' Documents

PageMasters also relies upon documents beyond the complaint; but, it does not request that the court take judicial notice of any of those documents. Perhaps most significantly, PageMasters is

relying upon a September 12, 2007, letter from PageMasters to Autodesk to establish that in its view that is the accrual date of its breach of contract claim against Autodesk. In that letter,

PageMasters informs Autodesk of this court's September 11, 2007, decision denying the former's motion for post-judgment relief. Resp. (doc. 17), exh. B thereto. See

PageMasters then inquires as to PageMasters

"whether Autodesk will demand an audit of Oce[.]" Id.

also attaches to its Response the December 11, 2006, affidavit of its attorney, which is exhibit M to Autodesk's RJN. Unlike the

RJN, however, PageMasters includes the five exhibits to that affidavit, including communications between PageMasters and Autodesk pertaining to the former's request that Autodesk demand an audit of Océ. Autodesk objects to what it views as this impermissible expansion of the record. Autodesk accurately points out that the

complaint does not include allegations of these purported -6-

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communications between it and PageMasters as to an audit demand. Autodesk further asserts, with no explanation, that these communications are not proper matters for judicial notice, even if PageMasters had made such a request. The court is well aware that Fed. R. Evid. 201(c) allows it "to take judicial notice whether requested or not." are subject to judicial notice, however. Not all facts

Only those which are

"either (1) generally known within the . . . jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned" are properly subject to judicial notice. Fed. R. Evid. 201(b).

Except for the court filings which PageMasters attaches to its response (including the McKee affidavit of which judicial notice has already been taken), none of the other matters are the "kinds of facts" which may be judicially noticed. See id. Thus, even if

the court were so inclined, it could not take judicial notice of the correspondence between PageMasters and Autodesk pertaining to the audit demand. Given the scant allegations in the complaint,

and in light of the foregoing, the facts set forth below are drawn primarily from documents referenced in the complaint or prior court filings of which the court has taken judicial notice. II. Factual & Procedural History Essentially this litigation began with PageMasters' 2003 demand upon Océ for an arbitration. PageMasters I and PageMasters II. arising out of the Océ Agreement. Two lawsuits followed -So, this is the third lawsuit Assuming familiarity with those

prior proceedings, there is no need to repeat the entire protracted history of this litigation. Some aspects of that history bear -7-

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repeating, though, because they directly pertain to the narrow issues which Autodesk's motion raises. Basically the Océ Agreement granted Océ an exclusive right to license PageMasters' software. RJN (doc. 11), exh. A thereto.

Under the terms of that Agreement, Océ agreed to pay PageMasters royalties for copies of the software which Océ shipped. A thereto at §§ 5.4 and 5.6. Id., exh.

One provision of that Agreement has

been at the center of this dispute for years - the audit provision. The Agreement required Océ to "maintain a complete, clear and

accurate record of the number of copies of the Software [which it] shipped[.]" Id. at ¶ 5.6. Correspondingly, PageMasters had "the

right - upon 10 . . . days prior written notice - to have an inspection and audit of all such records of Océ conducted by an independent audit firm reasonably acceptable to both parties[.]" Id. Roughly three years later, in March 2000, PageMasters entered into the APA with Autodesk. That APA mandated that "[a]ll accounts

receivables [sic] for sales that occurred prior to closing [i.e., March 21, 2000], . . . remain[ed] the property of [PageMasters]." RJN (doc. 11), exh. B thereto at 14 (Schedule G). "All unbilled

receivables for sales that occurred prior to the closing, . . . also remain[ed] the property of [PageMasters] including monies due from Oce." Id. In assigning the rights of the Océ Agreement to

Autodesk, Autodesk "assume[d] all responsibilities under th[at] . . . Agreement as of the Closing." § 5.16. As with the audit provision in the Océ Agreement, one provision of the APA -- the so-called single audit provision -- has -8Id., exh. B thereto at 20,

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been hotly disputed in the prior actions, and continues to be here. That provision states in relevant part: [Autodesk] will provide reasonable assistance to [PageMasters] to assist [PageMasters] in conducting a single audit of Océ's financial records (as permitted under the Océ Agreement) to verify amounts due and paid by Océ to [PageMasters] prior to the Closing, and will pay [PageMasters] the Net Revenues actually recovered pursuant to such audit. Id. A. PageMasters I

In approximately "October 2000, PageMasters notified Oce that it was exercising its right to conduct an audit of its books and records." RJN (doc. 11), exh. J thereto at 3, ¶ 16; see also RJN A dispute arose as to the

(doc. 11), exh. I thereto at 7, ¶ 26.

scope of that audit and eventually, in 2003, PageMasters commenced an arbitration proceeding against Océ. 10, ¶¶ 27-39. Id., exh. I thereto at 7-

In response to Océ's motion to dismiss that

arbitration, on November 26, 2003, inter alia, PageMasters filed a cross-motion seeking "leave to . . . join Autodesk . . . as an indispensable party." Id., exh. O thereto at 10. PageMasters

argued that "to the extent [that] the Arbitrator finds that the provisions of the [APA], required . . . Autodesk . . . to affirmatively pursue PageMasters' claims (the right to perform an audit and receive payment of accounts receivable existing prior to the [APA])," it should be granted "leave to join Autodesk as an indispensable party to the arbitration." 10-11. Id., exh. O thereto at Id., exh. D

The arbitrator denied Océ's motion to dismiss.

thereto at 5, ¶ 19. cross-motion.

The record is silent as to the outcome of that

Océ then commenced an action in this court seeking to enjoin -9-

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PageMasters from pursuing the arbitration.

During PageMasters I,

PageMasters took the position that under the APA it "did not transfer and assign to [Autodesk] its right to conduct an audit of Océ's books and records" under the Océ Agreement. 11), exh. D thereto at 2, ¶ 3. See RJN (doc.

Similarly, Pagemasters' indicated

its "understanding that, under [the single-audit provision] of the [APA] . . . , it remained entitled to demand an audit of Oce under the [Océ] Agreement." omitted). Id., exh. D thereto at 7, ¶ 28 (citation

PageMasters based its "understanding" on the declaration

of Jayson Jones, one of its "shareholder[s]" and "officer[s][.]" Id., exh. E thereto at 1, ¶ 1. Based upon his "personal knowledge" acquired through "active[] participat[ion]" in negotiati[ng]" both the Océ Agreement and the APA, Mr. Jones declared that "[b]ased on the language in [the single-audit provision] of the [APA], [he] understood that PageMasters continued to have the right to demand an audit of Oce's books and records under the [Océ] Agreement." at 1, ¶¶ 1-3; and 5. Id., exh. E thereto

Mr. Jones further declared that he

"understood and intended that, if Oce failed or refused to allow PageMasters to properly audit its books and records, PageMasters was permitted to pursue its rights and remedies under the [Océ] Agreement with [Autodesk]." Id., exh. E thereto at 2, ¶ 7. At

that time Mr. Jones frankly declared that "[o]n behalf of PageMasters, [he] did not intend that . . . Autodesk, would be burdened with pursuing Oce to recover on any of PageMasters' rights and claims that existed at the time of the [APA]." thereto at 2, ¶ 8. Id., exh. E

With further candor, Mr. Jones stated that he

"did not want . . . Autodesk to pursue PageMasters' rights, - 10 -

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because" it did not have "the business information and financial motivation to vigorously pursue claims solely for PageMasters' benefit." Id. In essence, PageMasters' response to Océ' summary See id.,

judgment motion in PageMasters I incorporated this view.

exh. C thereto at 12 ("It would be illogical for the parties to contemplate that [Autodesk] would be burdened with pursuing PageMasters' right that existed under the Oce Agreement prior to the closing of the [APA].") Furthermore, in PageMasters I, PageMasters reiterated its position that PageMasters was an "indispensable party to the Arbitration[.]" Id., exh. C thereto at 16 and 17. Finding that the

APA did "not state that PageMasters retained a right to pursue arbitration against Océ[,]" on October 25, 2004, this court granted Océ's summary judgment motion. at 13:23-24. Id., exh. F thereto at 7:23-25; and

The court also denied PageMasters leave to join Id., exh. F thereto at 13:2-3.

Autodesk in the arbitration.

Likewise, although PageMasters discussed the issue of its audit right in PageMasters I, the court explicitly declined to rule on that issue because it was "not currently before th[e] Court." exh. F thereto at 5: n 4. B. Pagemasters II Id.,

Trying a new tactic, a week after the entry of that order, on November 1, 2004, PageMasters filed suit against Océ in Maricopa County Superior Court, State of Arizona. Id., exh. G thereto.

PageMasters sought to compel an audit pursuant to the terms of the Océ Agreement. that action. After removal to this court, on cross-motions for summary - 11 PageMasters did not name Autodesk as a party to

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judgment, PageMasters again took the position that under the APA it "did not transfer and assign to [Autodesk]. . . its right to conduct an audit of Oce's books and records[.]" Id., exh. I thereto at 4, ¶ 12. PageMasters continued to adhere to its view that under

the APA, it had "negotiated for a continuing right to audit Oce's books and records." omitted). On March 23, 2006, this court granted Océ's motion for summary judgment. The court found that the APA did "not state that Id., exh. I thereto at 7, ¶ 22 (citation

PageMasters retained the right to independently pursue . . . an audit[]" under the single-audit provision. 9:1-2. Id., exh. K thereto at

"Instead," the court found that the APA "language

specifically declares that [Autodesk] will provide reasonable assistance to PageMasters to assist PageMasters in conducting the audit[.]" Id., exh. K thereto at 9:2-5 (emphasis added). Further,

according to the court, "the plain language of the [APA] indicates that the parties intended to transfer to [Autodesk] all rights and responsibilities pertaining to the [Océ] Agreement, including the right to conduct the `single' audit to collect any remaining royalty payments due to PageMasters." 10. Id., exh. K thereto at 9:6-

In so holding, the court explained that "[t]he `single' audit

clause contained within section 5.16 is merely an agreement between PageMasters and [Autodesk] that requires [Autodesk] to allow and assist such an audit, and deliver to PageMasters any royalties it discovers through such an audit." (emphasis added). Id., exh. K thereto at 9:10-14

Finding "that the parties contemplated that only

[Autodesk] would have the right to conduct the audit of Océ[,]" the court concluded that "[a]n independent right to audit Océ was not - 12 -

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expressly retained for PageMasters within the contract." K thereto at 9:21-24.

Id., exh.

Finally, the court denied PageMasters' Id., exh. K thereto at

request for leave to join [Autodesk][.]" 11:15-17.

Nine months later, PageMasters moved for relief from judgment of that March 23, 2006 order. Id., exh. L thereto. The basis for

that motion was Océ's supposed "fail[ure] to disclose the fact that it had entered into an agreement with Autodesk . . . , to acquire the right and interests under" the Océ Agreement. thereto at 1. Id., exh. L

On September 11, 2007, the court denied that motion,

finding, inter alia, that in the exercise of due diligence, PageMasters could have discovered the Autodesk-Océ Agreement. exh. O thereto at 7-9. C. Pagemasters III In a Id.,

On March 20, 2008, PageMasters filed the present action.

sparse complaint, with no mention of the preceding four years of litigation in this court, PageMasters alleges that it "has demanded that Autodesk perform its responsibilities under the [APA] . . . to demand an audit of Oce's financial records[,]" and to pay PageMasters what it believes is "several million dollars" owed to it by Océ. Co. (doc. 1) at 3, ¶¶ 9 and 10. Conspicuously lacking

from the complaint are any allegations as to the time frame of that demand. Again with no mention of time frame, PageMasters baldly

alleges that "Autodesk has refused to perform its responsibilities under, and therefore . . . is in breach of, the [APA]." ¶ 11. Id. at 3,

PageMasters is seeking a declaration that Autodesk is

"required . . . to demand and perform an audit of Oce's financial records and turn over to PageMasters the net revenues from accounts - 13 -

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receivable due and owing by Oce to PageMasters[.]" Id. at 3, ¶ (A). PageMasters also seeks an award of "appropriate damages[.]" Id. at 3, ¶ (B). Discussion Autodesk filed the present pre-answer motion asserting three independent grounds for dismissal. First, plaintiffs' claims are Second, the equitable Third, even if neither of

barred by the statute of limitations. doctrine of laches bars those claims.

those defenses are availing, Autodesk maintains that it is entitled to dismissal for failure to state a claim because it has no obligation under the APA to "demand and perform" an audit. Its

obligation thereunder is limited to providing reasonable assistance with the audit. The court will address the statute of limitations argument first because if Autodesk prevails on that argument, it renders moot the other two dismissal arguments. I. Statute of Limitations "If the expiration of the applicable statute of limitations is apparent from the face of the complaint," it is well settled that "the defendant may raise [that] defense in a Rule 12(b)(6) motion to dismiss." See In re Juniper Networks, Inc. Sec. Litig.,

542 F.Supp.2d 1037, 1050 (N.D.Cal. 2008) (citing Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980)). In the present

case, however, the complaint does not include any allegations whatsoever as to time. It is, therefore, impossible to ascertain Thus,

from the face thereof the timeliness of this action.

Autodesk properly resorted to the judicially noticed matters previously discussed, in an effort to show its entitlement to - 14 -

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dismissal on statute of limitations grounds.

See Yeager v. Bowlin,

2008 WL 3289481 at *3 (E.D.Cal. Aug. 6, 2008) (internal quotation marks and citation omitted) (taking judicial notice "of the fact and content" of documents filed in other cases as they "directly relat[ed]" to whether and when plaintiff had notice of his potential claims such that they would not be barred by the applicable statutes of limitations[]); see also Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1319-20 (9th Cir. 1998) ("[W]hen the strobe of judicial notice is played upon [plaintiff's] pleading, it appears perfectly clear that the statute of limitations is a defense[.]") The parties agree that California's four year statute of limitations for breach of contract actions, Cal Code Civ. Proc. § 337(1),5 applies to this declaratory judgment action premised upon breach of the APA. See Booth v. Quantum3d, Inc., 2005 WL 1512138,

at *9 (N.D.Cal. June 15, 2005) (applying California's four year statute of limitations in declaratory judgment action based upon breach of contract) (citing, inter alia, 118 East 60th Owners, Inc. v. Bonner Properties, Inc., 677 F.2d 200, 2002 (2d Cir. 1982) ("When the declaratory judgment sought by a plaintiff would declare his entitlement to some affirmative relief, his suit is time-barred if the applicable limitations period has run on a direct claim to obtain such relief.")) They disagree, however, as to the accrual
California law applies because that is the "governing law" of the APA. RJN (doc. 11), exh. B thereto at 11, § 8.16. This choice of law provision includes limitations periods. See In re Western United Nurseries, Inc., 2000 WL 34446155, at *8 (D.Ariz. July 3, 2000) (footnote omitted) ("Arizona's conflict-of-law principles no longer treat limitations periods as procedural matters to be determined by the law of the forum. Instead, section 187 of the Restatement requires that a valid, general choice-of-law clause be deemed to include the statutes of limitations of the chosen state."), amended in part, vacated in part on rehearing on other grounds, 2000 WL 3448963 (D.Ariz. Sept. 29, 2000).
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date for that statute of limitations. Autodesk maintains that PageMasters' cause of action accrued in October, 2000, prior to the Autodesk/Buzzsaw merger, when PageMasters began to conduct an audit pursuant to the Océ Agreement. Autodesk asserts that "PageMasters could have enforced

the [reasonable] assistance clause at that time[,]" but it did not. Mot. (doc. 10) at 11:2-3 (citation omitted). Instead, PageMasters

waited until seven years later, March, 2008, when it commenced this lawsuit to attempt to enforce that clause against Autodesk. Autodesk argues that this action is time-barred. Alternatively, Autodesk contends that PageMasters was on notice of its claim against Autodesk at least by November 26, 2003, when it filed a motion to join Autodesk as an "indispensable party" in the arbitration. See RJN (doc. 11), exh. D thereto at 5, ¶ 17 Therefore, Autodesk Thus,

(citation omitted); and exh. N thereto.

contends that this action is not timely because it accrued at the time of that notice, on November 26, 2003, more than four years prior to the commencement of this action. PageMasters did not dispute or otherwise respond to Autodesk's arguments that the accrual date is either October 2000, or November 23, 2006. Instead, noting the absence of any "deadline" in the

agreements as to performance of an audit by Autodesk, PageMasters declares that the statute of limitations "did not accrue until it sent [a] written demand to Autodesk on September 12, 2007, and Autodesk notified PageMasters that it was refusing to perform the

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duties demanded of it by PageMasters.6" (emphasis added).

Resp. (doc. 17) at 4

Thus, PageMasters argues that this action, which

was filed less than a year later, on March 20, 2008, is timely. Autodesk challenges PageMasters's reliance upon "`discussions' and correspondence" not alleged in the complaint as a basis for establishing a September 2007 accrual date. Even taking those

matters into account, it is Autodesk's position that it should still prevail on its statute of limitations defense because, basically, PageMasters sat on its rights by not making a demand for performance earlier. Finally, Autodesk distinguishes PageMasters'

authority because those cases did not involve "the situation in which the plaintiff's right to demand performance has accrued but nonetheless the plaintiff fails to exercise that right within the limitations period." Reply (doc. 20) at 6:7-9 (footnote omitted).

"Under California law, an action must be commenced within the prescribed limitations period `after the cause of action shall have accrued.'" Diorio v. Coca-Cola Company, 2009 WL 483190, at *2 (S.D.Cal. Feb. 24, 2009) (quoting CAL. CODE CIV. PROC. § 312). In

California, "[a] cause of action accrues when the wrongful act is done and the consequent liability arises." Id. (citation omitted).

"[I]n ordinary . . . contract actions, the statute of limitations . . . begins to run upon the occurrence of the last element essential to the cause of action." El Pollo Loco, Inc. v. Hashim, 316 F.3d

1032, 1039 (9th Cir. 2003) (internal quotation marks and citation
6

As discussed earlier, the court is not considering this September 12, 2007 letter. Nonetheless, the court observes that there is nothing in that letter or elsewhere which indicates when Autodesk purportedly refused to perform. Hence, it is impossible to ascertain both when PageMasters demanded that Autodesk fulfill its responsibilities under the APA, and, in turn, when Autodesk supposedly refused.

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omitted).

In a case such as this, however, where the contract does

not specify a time for "performance of an act required to be performed," then, "a reasonable time is allowed." 1657. By contending that the accrual date is September 12, 2007, Autodesk retorts that PageMasters "ignore[s]" the "well-settled principle" that where a contract "provides that a party can demand action by another party, that party cannot unilaterally toll the statute of limitations indefinitely by refusing to make a demand." Reply (doc. 20) at 4:25-26 (citation omitted). It is not Cal. Civ. Code §

PageMaster's disregard for that principle which undermines its argument that the accrual date is September 12, 2007. Rather, as

Autodesk alludes to, and explained below, it is PageMasters' failure to make a demand within the statute of limitations which defeats its suggestion of a September 12, 2007 accrual date. "Where a demand is an integral part of a cause of action, the statute of limitations does not run until demand is made." Phillis

v. City of Santa Barbara, 229 Cal.App.2d 45, 55, 40 Cal.Rptr. 27, 31 (1964) (internal quotation marks and citation omitted). Generally, "where demand is necessary to perfect a right of action and no time therefore is specified in the contract, the demand must be made within a reasonable time after it can lawfully be made." Id. (internal quotation marks and citations omitted). "What is a

reasonable time depends upon the circumstances of each case; but in the absence of peculiar circumstances, a time coincident with the running of the statute will be deemed reasonable, and if a demand is not made within that period, the action will be barred." (internal quotation marks and citation omitted). - 18 Id.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Applying these well-settled rules to the present case, clearly this action is time-barred. The APA does not specify a time frame

in which PageMasters was required to demand that Autodesk provide "reasonable assistance" with the Océ audit. suggestion of "peculiar circumstances." And, there has been no

That means that for

PageMasters' action to be timely, it should have demanded that Autodesk provide reasonable assistance with the Océ audit within four years of the time it first initiated the audit. In other

words, it should have demanded reasonable assistance by October 2004 at the latest. It is undisputed that PageMasters did not make Accordingly, the court

a demand within that four year time frame.

grants Autodesk's motion to dismiss based upon the statute of limitations. See Guerrero-Melchor v. Arulaid, 2008 WL 539054, at

*2 (W.D.Wash. Feb. 22, 2008) (citation omitted).7 II. Failure to State a Claim Although the court has found that this action is time barred, it will, nonetheless, address Autodesk's argument on the merits. Even if timely, Autodesk maintains that dismissal is proper because
Having resolved Autodesk's statute of limitations argument on the grounds of failure to timely make a demand, there is no need to consider its alternative argument that PageMasters had notice inquiry of its claim on November 26, 2003, when it first filed a motion to join Autodesk as an indispensable party. The court does have two observations about Autodesk's attempt to invoke what is commonly referred to as the discovery rule. First, "[t]here is generally little need" to rely upon that rule "in breach of contract cases[,]" such as this. See Leonard v. The College Network, Inc., 2004 WL 2944050, at *4 (N.D.Cal. Dec. 17, 2004). The discovery rule may be applied in "unique breach of contract cases[,]" essentially "involving fraud or misrepresentation[,]" El Pollo Loco, 316 F.3d at 1039 and 1040 (internal quotation marks and citations omitted); but, PageMasters' complaint does not include any such allegations. Second, and more importantly, typically plaintiffs - not defendants ­ invoke the discovery rule, which "permits delayed accrual until a plaintiff knew or should have known of the wrongful conduct at issue." Id. at 1039(internal quotation marks and citation omitted). In light of the foregoing, the court has serious reservations whether the discovery rule can be applied defensively. Resolution of that issue can be left to another day however.
7

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this action is based on the "unfounded assertion" that it had an obligation under the APA to "demand and perform" an audit of Océ's financial records. Mot. (Doc. 10) at 17:3-4. Autodesk's

obligation under the APA was much more limited, it asserts, requiring only that it provide "`reasonable assistance'" to PageMasters in conjunction with the Océ audit. Id. at 16:10

(quoting, inter alia, RJN (doc. 12), exh. B thereto at 20, § 5.16)) Remarkably, PageMasters did not respond at all to this argument. The court construes PageMasters' silence as conceding See Tatum v.

the validity of Autodesk's argument on the merits.

Schwartz, 2007 WL 419463, at *3 (E.D.Cal. Feb. 5, 2007) (granting defendants' motion to dismiss where plaintiff "tacitly concede[d] . . . claim by failing to address defendants' argument in her opposition[]"). Even without that implicit concession, Autodesk

would prevail for the reasons set forth below. A cause of action for breach of contract in California "requires proof of the following elements: (1) existence of the contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach." Nava v. VirtualBank, 2008 WL 2873406, at *10

(E.D.Cal. July 16, 2008) (quoting CDF Firefighters v. Maldonado, 158 Cal.App.4th 1226, 1239, 70 Cal.Rptr.3d 667 (2008)). "Resolution of contractual claims on a motion to dismiss is proper if the terms of the contract are unambiguous." Monaco v. Bear

Stearns Residential Mortgage Corp., 554 F.Supp.2d 1034, 1040 (C.D.Cal. 2008) (internal quotation marks and citations omitted). The court must decide in the first instance "whether the contract language is clear or ambiguous[.]" Navarro v. Mukasey, 518 F.3d - 20 -

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

729, 734 (9th Cir. 2008) (citing Bank of the West v. Superior Court, 2 Cal.4th 1254, 10 Cal.Rptr.2d 538, 545, 833 P.2d 545 (1992)). Under California law, "[a] contract provision will be considered ambiguous when it is capable of two or more reasonable interpretations." omitted). Monaco, 544 F.Supp.2d at 1040 (citation

In construing a contract, "[l]anguage . . . must be Id.

interpreted as a whole and in the circumstances of the case." (citation omitted).

"Where the language leaves doubt as to the Id.

parties' intent, . . . the motion to dismiss must be denied." (internal quotation marks and citations omitted). By the same

token though, "[i]f the contract language is clear, [the court] give[s] effect to its plain meaning." Navarro, 518 F.3d at 734

(citation omitted); see also Arbor Acres Farm, Inc. v. GRE Ins. Group, 2002 WL 32107944, at *2 (E.D.Cal. Jan. 23, 2002) (internal quotation marks and citation omitted) ("Interpretation of written instrument is solely a judicial function unless the determination turns upon the credibility of extrinsic evidence.") Here, the parties have differing interpretations of the APA's single audit provision. As recited earlier, that provision states:

[Autodesk] will provide reasonable assistance to [PageMasters] to assist [PageMasters] in conducting a single audit of Océ's financial records (as permitted under the Océ Agreement) to verify amounts due and paid by Océ to [PageMasters] prior to the Closing, and will pay [PageMasters] the Net Revenues actually recovered pursuant to such audit. RJN (doc. 11), exh. B thereto at 20, § 5.16 (emphasis added). Quoting directly from section 5.16, Autodesk reads that section as requiring that it provide "reasonable assistance" to PageMasters "to assist" PageMasters in conducting the audit. - 21 Apparently, in

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Autodesk's view, "reasonable assistance" does not encompass demanding the audit of Océ in the first place. Based upon the allegations in the complaint, however, evidently PageMasters is construing section 5.16 as requiring Autodesk to demand an audit of Océ. PageMasters expressly alleges

that Autodesk breached "its responsibilities under . . . the [APA][,]" by not "demand[ing] an audit of Oce's financial records[.]" Co. (doc. 1) at 3, ¶¶ 9 and 11 (emphasis added). relief which PageMasters seeks is even broader in scope. The

As a

result of that alleged breach, PageMasters seeks a declaration that "Autodesk is not only required to "demand . . . an audit of Oce's financial records[,]" but also to "perform" that audit. id. at 3, ¶ (A) (emphasis added). Applying the familiar rules of contract interpretation See

15 construction outlined above, the court finds that section 5.16 of 16 the APA is clear and unambiguous. 17 reasonable interpretations. It is not capable of two or more

That section requires, as Autodesk

18 maintains, only that Autodesk give "reasonable assistance" to 19 PageMasters in conducting the audit. Making the initial demand for

20 the audit does not come within the plain and ordinary meaning of 21 "assist." "The American Heritage Dictionary of the English

22 Language defines `to assist' as `[t]o give help or support to, 23 especially as a subordinate or supplement; aid.'" U.S. v. 24 Approximately 64,695 Pounds of Shark Fins, 520 F.3d 976, 980 (9th 25 Cir. 2008) (quoting American Heritage Dictionary of the English 26 Language (4th ed.2000)) (emphasis added). Nor under any reasonable

27 interpretation of "assistance" can performance of the audit, as 28 PageMasters seeks in its prayer for relief, constitute mere - 22 -

1 "assistance."

Under the circumstances, the assistance language in

2 the APA, which necessarily includes an element of subordination, 3 cannot reasonably be read to require Autodesk to demand an audit of 4 Océ in the first instance. Moreover, the court cannot ignore the

5 fact that nowhere in the APA is Autodesk under any obligation to 6 "demand and perform" an audit of Océ - the precise relief to which 7 PageMasters claims it is entitled. See Co. (doc. 1) at 3, ¶ (A).

8 Therefore, the court finds that Autodesk is entitled to dismissal 9 of the complaint as against it because it is "clear from the 10 unambiguous terms of the [APA] that the alleged conduct by 11 [Autodesk] does not constitute breach of contract." See Mieuli v.

12 Debartolo, 2001 WL 777447, *5 (N.D.Cal. Jan. 16, 2001) (citations 13 omitted). 14 The court would be remiss if it did not address PageMasters'

15 suggestion that its summary judgment order in PageMasters II 16 somehow governs the scope of the parties' obligations here. 17 PageMasters' reliance upon that order is misplaced because Autodesk 18 was not a party to that action. Therefore, any findings therein

19 cannot be given preclusive effect against Autodesk, based upon the 20 doctrine of collateral estoppel. See Kendall v. Visa U.S.A., Inc.,

21 518 F.3d 1042, 1050 (9th Cir. 2008) (internal quotation marks and 22 citation omitted) ("Issue preclusion prevents a party from 23 relitigating an issue decided in a prior action if four 24 requirements are met[,]" including "the person against whom 25 collateral estoppel is asserted in the present action was a party 26 or in privity with a party in the previous action.") Not only that, 27 if PageMasters is attempting to rely upon collateral estoppel, it 28 has failed to meet its burden because it has not proven that each - 23 -

1 of the four elements of issue preclusion are met here. 2 1050-1051.

See id. at

Finally, the court notes that consistent with its

3 reading herein of section 5.16 of the APA, in PageMasters II, it 4 read that same section as "merely an agreement between PageMasters 5 and [Autodesk] that requires [Autodesk] to allow and assist such an 6 audit[.]" RJN (doc. 11), exh. K thereto at 9:11-13 (emphasis 7 added). For all of these reasons, the court finds that PageMasters

8 has failed to state a claim for which relief may be granted against 9 Autodesk. 10 11 Conclusion Having found that this action is barred by California's four

12 year statute of limitations for breach of contract, and that, 13 alternatively, plaintiff has failed to state a cause of action for 14 breach of contract under California law,8 IT IS ORDERED that: 15 (1) "Defendant Autodesk, Inc.'s Motion to Dismiss PageMasters'

16 Complaint" (doc. 10) is GRANTED; and the complaint is dismissed 17 with prejudice; and 18 (2) the Clerk of the Court is directed to enter JUDGMENT in

19 favor of defendant Autodesk, Inc. and to terminate the case. 20 21 22 23 24 25 26 Copies to counsel of record 27 28
Given these alternative bases for dismissal, there is no need to consider Autodesk's laches argument.
8

DATED this 30th day of March, 2009.

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