Lonely Maiden Productions v. Goldentree Asset Management
201 Cal. App. 4th 368
| Cal. Ct. App. | 2011Background
- Film clients used Axium for payroll processing; Axium paid payroll and taxes and invoiced film clients, who transferred funds to Axium.
- GoldenTree had a perfected security interest in Axium’s general deposit accounts and foreclosed, transferring about $28 million to GoldenTree.
- Film clients sued GoldenTree for unjust enrichment, conversion, and fraud-related claims, alleging invoices misrepresented that funds would be used to pay wages and payroll obligations.
- Service agreements contained an integration clause; Hostage and other entities participated; Axium’s role and agency status were questioned.
- Trial court granted GoldenTree summary judgment; appellate court affirmed, rejecting claims of express or resulting trusts and fiduciary duties against GoldenTree.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did GoldenTree owe a duty to refrain from foreclosing on funds? | GoldenTree’s actions violated implied expectations that funds were dedicated to payroll. | There was no express trust or fiduciary duty; funds were subject to the secured lender’s rights. | Yes, no duty; funds not held in trust against GoldenTree |
| Are the funds held in express or resulting trust and thus not subject to foreclosure? | Contracts and conduct manifested a trust in funds for payroll. | No express trust; parol evidence barred; no resulting trust due to lack of intention. | No express or resulting trust; Axium had debtor-creditor relationship |
| Does the parol evidence rule bar extrinsic evidence on contract interpretation? | Extrinsic evidence shows ambiguity and intent to restrict use of funds. | Integration clause makes written terms complete; extrinsic evidence cannot modify. | Parol evidence rule applies; no ambiguity in service agreements |
| Was there an agency or paying-agent relationship between Axium and the film clients? | Axium acted as paying agent; funds should be used as invoiced. | Service agreements disclaimed agency; no enforceable paying-agent status. | No agency relationship established |
Key Cases Cited
- Roberts v. Ball, Hunt, Hart, Brown & Baerwitz, 57 Cal.App.3d 104 (Cal. App. 2d Dist. 1976) (elements of fraud require misrepresentation, knowledge, intent, reliance, damages)
- Pollyana Homes, Inc. v. Berney, 56 Cal.2d 676 (Cal. 1961) (integration clause and parol evidence impact on contract interpretation)
- In re Black & Geddes, Inc., 35 B.R. 830 (S.D.N.Y. 1984) (trust concepts in bankruptcy context guiding non-trust fund treatment)
- Chang v. Redding Bank of Commerce, 29 Cal.App.4th 673 (Cal. App. 1994) (progress payments to subcontractors held in trust when contract required payments to be made to them)
- Marsh v. Home Federal Sav. & Loan Assn., 66 Cal.App.3d 674 (Cal. App. Dist. 3 1977) (manifested intention to create a trust in impounds; express trust doctrines )