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Adawiya wrote UMPG, criticizing its accounting practices for the following reason: “local foreign overseas offices reported 100% of the receipts to a (“UM[P]G”) main office, called the “HUB,” located in the United Kingdom. “ ‘Where no duty is imposed by law to make inquiry, and where, under the circumstances, a prudent man would not be put on inquiry, the mere fact that means of knowledge are open and not availed of does not operate to give constructive notice of the facts.’ ” (Baker v.
[sic ] where then (“UM[P]G”) main office in the UK “HUB” kept 25% of the gross income and reported 75% of the income to their offices in the USA.
The complaint alleges numerous breaches, which concern the collection of royalties, calculation of the amount of the royalties, accounting of royalties, and the failure to provide requested documentation concerning the royalties.
The trial court dismissed the cause of action for breach of the implied covenant of good faith and fair dealing following UMPG's demurrer. Rptr.2d 684.)There is some authority in support of UMPG's argument that the discovery rule does not apply to a plaintiff who had the means to discover the wrongdoing.
Failure To Conduct an Audit Does not Automatically Show a Lack of Diligence UMPG's principal legal argument is as follows: “California case law fully supports the principle that one with the right to monitor another's performance under a contract is charged with the knowledge he would have obtained if he had done so.” According to UMPG “[t]he trial court correctly found that Weatherly's decision not to audit precluded him from demonstrating the blameless ignorance that is necessary to invoke the ‘delayed discovery’ doctrine.” (Original italics.)Weatherly argues, among other things, that the statute of limitations and contractual limitations period should be tolled because he provided evidence that UMPG's royalty statements were misleading in indicating that his “50% share was being calculated on 100% of all monies UPMG [sic ] received․” According to Weatherly, “[i]n addition to improperly keeping 25% to 40% of the amounts due to Weatherly on the royalties collected, UMPG refused to provide requested source documentation from foreign performing rights societies and foreign suspense reports which would show the actual amount of royalties received for the exploitation of Weatherly's work abroad.” “The discovery rule protects those who are ignorant of their cause of action through no fault of their own.
It permits delayed accrual until a plaintiff knew or should have known of the wrongful conduct at issue.
was a United States corporation and since KECA MUSIC, INC.
is defined as Publisher, UMPG is correct in applying a 50% royalty rate to amounts received in the United States.
Adawiya previously had audited UMPG records on behalf of other clients, and he recommended the audit to Weatherly.
Planitiff [sic ] had the right to audit the books at any time but chose to wait until 2001 to do so.
The delayed discovery rule does not apply under these circumstances. 421 (April Enterprises, Inc.).) A plaintiff, prevented from discovery, should not suffer and a defendant should not “knowingly profit” from the plaintiff's ignorance.
In the process of conducting the audit, Adawiya asked Anthony Saragueta, vice-president of royalties for UMPG, “whether they were reporting to Mr.
Weatherly 100 percent of the amount received by the foreign companies at the source” and Saragueta responded that it reported “75 percent.” According to Adawiya, Saragueta refused to give Adawiya the source documents but told Adawiya that foreign affiliates were taking 25 percent off the top. 1520, 1525.) Other cases reject the conclusion that the means of inquiry is automatically tantamount to a duty of inquiry.
Therefore, there is no basis for this claim.”PROCEDURAL BACKGROUNDWeatherly filed suit on October 4, 2002.