Beware The Pleading Admission!
"Beware the Jabberwock, my son!
The jaws that bite, the claws that catch!”
Plaintiffs/Respondents alleged Defendants/Appellants misrepresented they could raise sponsorship financing necessary for Plaintiffs to produce reality television shows, produced the show entitled “The Players Club” at considerable expense, and learned the financing was not forthcoming. Plaintiffs alleged negligence, fraud, misrepresentation, breach of contract, and breach of the implied covenant of good faith and fair dealing, seeking $3 million in damages, minus a $750,000 commission. Defendants sought, unsuccessfully, to compel arbitration, and appealed the order denying their request. Baseball-Players Club, LLC v. Brand-In Entertainment, LLC, Case No. B251173 (2/4 Sept. 2, 2014) (Epstein, Manella, Edmon) (unpublished).
The interesting wrinkle in this case is that both sides treated allegations in Plaintiffs’ unverified complaint as binding judicial admissions. In that unverified complaint, Plaintiffs referenced three reality shows, while claiming subsequently they were only seeking damages for The Players Club. The arbitration provision, however, did not mention The Players Club.
You can see where this is heading: Plaintiffs alleged they were not bound to arbitrate, because they only sought damages related to The Players Club, a reality show not mentioned by the arbitration provisions. Defendants, however, tried to stick Plaintiffs with judicial admissions, based on the complaint, that all three reality shows were implicated in the dispute, and therefore somehow covered by the various arbitration clauses.
Agreeing with Plaintiffs (and the trial court) that The Players Club dispute was not covered by an arbitration clause, the Court of Appeal explained that the doctrine that judicial admissions place factual allegations beyond dispute does not “apply when the admissions have been superseded by amendment, particularly when the original pleading is unverified. . . . To the extent respondents represent their claims are limited to ‘The Players Club,’ they have abandoned any alleged dispute regarding ‘The Natural’ or ‘Bragging Rights.’” Thus, the Court of Appeal has saved Plaintiffs from being ensnared by their own pleadings, while at the same time clarifying Plaintiffs have abandoned any claims that might have been covered by an arbitration clause.
Note: In an April 18, 2013 post, I wrote about another case in which a party seeking to avoid arbitration managed to avoid a binding judicial admission. Barsegian v. Kessler & Kessler, 215 Cal.App.4th 446 (2013) (partially certified for publication). In Barsegian, at oral argument, the defendant seeking to compel arbitration based on plaintiff’s allegation of agency, also made it clear it was reserving its right to argue it was not bound by the allegation of agency. Absent the agreement of the opposing party seeking a binding judicial admission, the court was not willing to treat the pleading as an admission.