By Cindy Troy
A California Appellate Judge found that the trial court erred in granting judgment in favor of DS Waters of America, Inc. (DS) for breach of contract with plaintiff and cross-defendant Anaheim Ducks Hockey Club, LLC (the Ducks), due to the immaterial nature of the initial breach. The trial court had entered judgment in favor of DS on the Ducks’ complaint for breach of contract and in favor of the Ducks on DS’s cross-complaint for breach of the same contract.
The two parties entered into a Sponsorship Agreement (agreement), effective from August 1, 2008 to June 30, 2011. In exchange for a sponsorship fee, the agreement allowed DS “the right to place and staff one (1) table on the Plaza Level of the Facility at each public event,” in addition to “the right to be the provider of five-gallon water service to the Ducks, the Facility and the Practice Facility and coffee service to the employees of the Ducks, the Facility and the Practice Facility.” The agreement also provided that “whenever a party is in default for failing ‘to perform any material obligation in a timely manner,’ the non-defaulting party shall deliver written notice specifying the default to the defaulting party.” Following a notice of default and a thirty-day period to cure, the non-defaulting party may terminate the agreement and accelerate the payment.
The trial court found a breach of the tabling provision because the Ducks did not allow DS to place a table on the Plaza Level at every event, relegating DS to the Terrace Level roughly 16 out of 52 games. In regards to the coffee exclusivity provision, the agreement claiming “the provider” instead of “a provider” was deemed sufficient to express exclusivity. However, in response to the Ducks’ breach, DS did not pay the sponsorship fee for the second or third years, leading the Ducks to send DS notices of default for the nonpayment of the second year, as well as a notice of termination.
In its analysis, the court considered “the conduct and behavior of the parties” in determining whether these breaches were material. DS never complained about either breach by the Ducks, despite the agreement’s provision that “if you think there’s a default…[you have] got to give written notice,” which never occurred because DS never thought the Ducks were in material default.
The appellate court contends that because the Ducks’ breaches of the sponsorship agreement between it and DS were not material, DS’s failure to perform under the contract was not excused. The trial court erred in granting judgment for DS, so the appellate court orders the trial court to enter judgment in favor of the Ducks.
Anaheim Ducks Hockey Club v. DS, 2014 Cal. App. Unpub. LEXIS 4831, 2014 WL 3107290 (Cal. App. 4th Dist. July 8, 2014).
Troy is a 2L at the University of Texas School of Law and Symposium Editor of the Texas Review of Entertainment and Sports Law
