1 LOUIS R. MILLER (State Bar No.

54141)
smiller@millerbarondess.com
2 A. SASHA FRID (State Bar No. 216800)
sfrid@millerbarondess.com
3 DAVID I. BOSKO (State Bar No. 304927)
dbosko@millerbarondess.com
4 MILLER BARONDESS, LLP
1999 Avenue of the Stars, Suite 1000
5 Los Angeles, California 90067
Telephone: (310) 552-4400
6 Facsimile: (310) 552-8400

7 JUSTIN A. JACOBS (Pro Hac Vice Application Pending)

jjacobs@selawfirm.com
8 SPECTOR & EHRENWORTH, P.C.
30 Columbia Turnpike, Suite 202
9 Florham Park, New Jersey 07932
Telephone: (973) 845-6527
10 Facsimile: (973) 593-4848

11 Attorneys for Plaintiffs

STEELY DAN, INC. and DONALD FAGEN
12

13 SUPERIOR COURT OF THE STATE OF CALIFORNIA

14 COUNTY OF LOS ANGELES, CENTRAL DISTRICT
15

16 STEELY DAN, INC., a California CASE NO. BC684353

corporation; and DONALD FAGEN, an
17 individual, PLAINTIFFS’ OPPOSITION TO
DEFENDANT’S DEMURRER TO
18 Plaintiffs, COMPLAINT
19 v. [Filed Concurrently with Request for Judicial
Notice]
20 THE ESTATE OF WALTER BECKER;
DELIA CIOFFI, as trustee of THE WALKER Date: February 21, 2018
21 BECKER REVOCABLE TRUST; NIGRO, Time: 8:30 a.m.
KARLIN, SEGAL, FELDSTEIN & BOLNO, Dept.: 62
22 LLC, a California limited liability company;
and DOES 1-25, inclusive, Assigned for All Purposes to:
23 Hon. Michael L. Stern, Dept. 62
Defendants.
24 Action Filed: November 21, 2017
Trial Date: None
25

26

27

28

368317.7
OPPOSITION TO DEMURRER TO COMPLAINT
 1 TABLE OF CONTENTS
Page
2

3 MEMORANDUM OF POINTS AND AUTHORITIES ...................................................................5 

4 I.  INTRODUCTION ..................................................................................................................5 

5 II.  FACTS ...................................................................................................................................7 

6 III.  LEGAL STANDARD ............................................................................................................8 

7 IV.  ARGUMENT .........................................................................................................................9 

8 A.  The Terms Of The Buy/Sell Agreement Demonstrate That The Agreement
Will Terminate Only After Defendant Sells, And Steely Dan Purchases,
9 Defendant’s Shares .....................................................................................................9 

10 B.  Defendant’s Interpretation Of Section 5 Fails............................................................9 

11 C.  Defendant’s Arguments, At Best, Suggest Ambiguity, Which Would
Require That The Court Overrule This Demurrer ....................................................10 
12
1.  Defendant’s “Chronological Interplay” Theory Fails ..................................12 
13
2.  Defendant’s “Alternative Language” Theory Fails ......................................12 
14
3.  Defendant’s “Use of Different Words” Theory Fails...................................13 
15
4.  Defendant’s “Any Event” Theory Is Wrong Too.........................................14 
16
5.  Defendant’s “Temporal Relationship” Theory Fails ....................................14 
17
D.  Defendant’s Forfeiture Argument Is Factual And Erroneous ..................................15 
18
V.  CONCLUSION ....................................................................................................................17 
19

20

21

22

23

24

25

26

27

28

368317.7 2
OPPOSITION TO DEMURRER TO COMPLAINT
 1 TABLE OF AUTHORITIES
2 Page
3
CASES 
4
Aragon-Haas v. Family Sec. Ins. Servs., Inc.,
5 231 Cal. App. 3d 232 (1991) ............................................................................................... 10

6 Aubry v. Tri-City Hosp. Dist.,

2 Cal. 4th 962 (1992)........................................................................................................... 11
7
Ballard v. MacCallum,
8 15 Cal. 2d 439 (1940) .................................................................................................... 15, 16

9 Bank of the W. v. Superior Court,

2 Cal. 4th 1254 (1992)......................................................................................................... 15
10
Boston LLC v. Juarez,
11 245 Cal. App. 4th 75 (2016) ................................................................................................ 15

12 City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,

68 Cal. App. 4th 445 (1998) .................................................................................................. 8
13
City of Dinuba v. County of Tulare,
14 41 Cal. 4th 859 (2007)......................................................................................................... 11

15 Dameron Hosp. Ass’n v. AAA N. Cal., Nev. & Utah Ins. Exch.,
229 Cal. App. 4th 549 (2014) .............................................................................................. 10
16
Fremont Indem. Co. v. Fremont Gen. Corp.,
17 148 Cal. App. 4th 97 (2007) ........................................................................................ 5, 7, 11

18 George v. Auto. Club of S. Cal.,

201 Cal. App. 4th 1112 (2011) ............................................................................................ 11
19
Glob. Modular, Inc. v. Kadena Pac., Inc.,
20 15 Cal. App. 5th 127 (2017) ................................................................................................ 15

21 Hastings v. Matlock,
171 Cal. App. 3d 826 (1985) ............................................................................................... 16
22
Hervey v. Mercury Cas. Co.,
23 185 Cal. App. 4th 954 (2010) .............................................................................................. 11

24 Jones v. Grewe,
189 Cal. App. 3d 950 (1987) ............................................................................................... 11
25
Klein v. Chevron U.S.A., Inc.,
26 202 Cal. App. 4th 1342 (2012) ........................................................................................ 9, 11

27 M & G Polymers USA, LLC v. Tackett,

135 S. Ct. 926 (2015) .......................................................................................................... 11
28

368317.7 3
OPPOSITION TO DEMURRER TO COMPLAINT
 1 McAllister v. County of Monterey,
147 Cal. App. 4th 253 (2007) .............................................................................................. 11
2
Rutherford Holdings, LLC v. Plaza Del Rey,
3 223 Cal. App. 4th 221 (2014) .............................................................................................. 11

4 S. Pac. Land Co. v. Westlake Farms, Inc.,

188 Cal. App. 3d 807 (1987) ............................................................................................... 11
5
Serrano v. Priest,
6 5 Cal. 3d 584 (1971) .............................................................................................................. 8

7 SKF Farms v. Superior Court,

153 Cal. App. 3d 902 (1984) ............................................................................................... 15
8
Youngman v. Nev. Irrigation Dist.,
9 70 Cal. 2d 240 (1969) ............................................................................................................ 8

10

11 STATUTES 

12 Cal. Civ. Code § 3528 ....................................................................................................................... 8

13 Cal. Civ. Proc. Code § 452 ................................................................................................................ 8

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

368317.7 4
OPPOSITION TO DEMURRER TO COMPLAINT
 1 MEMORANDUM OF POINTS AND AUTHORITIES
2 I. INTRODUCTION
3 Plaintiffs Steely Dan, Inc. (“Steely Dan”) and Donald Fagen (“Fagen”) brought this action

4 to enforce a Buy/Sell Agreement entered into by Fagen, Walter Becker (“Becker”), and four other

5 Steely Dan band members, on October 31, 1972 (the “Buy/Sell Agreement” or “Agreement”).

6 Steely Dan owns the rights to the name of Steely Dan, a famous classic rock band. Fagen is a co-

7 founder and lead singer of Steely Dan.

8 It is undisputed that Section 1.A of the Buy/Sell Agreement requires that upon the death or

9 termination of employment of any Steely Dan stockholder, Steely Dan shall purchase, and the

10 terminated stockholder shall sell, all of the stockholder’s shares of Steely Dan back to the

11 company. The Buy/Sell provision is mandatory, and it is also binding on anyone the terminated or

12 deceased stockholder may have transferred his shares to.

13 By 2010, there were two remaining shareholders of Steely Dan: Donald Fagen and Walter

14 Becker. Becker passed away on September 7, 2017. After his death, Fagen, on behalf of Steely

15 Dan, exercised the Buy/Sell to acquire the remaining 50 percent interest in the company from

16 Defendant. When Plaintiffs exercised their Buy/Sell rights, Defendant Delia Cioffi, Becker’s

17 widow and trustee of The Walter Becker Revocable Trust (“Defendant”), repudiated the Buy/Sell

18 Agreement. This lawsuit followed.

19 Defendant has demurred on a single ground: that pursuant to Section 5 of the Agreement,

20 the Buy/Sell Agreement terminated upon Becker’s death, and therefore the Agreement does not

21 require Defendant to sell its shares of Steely Dan back to the company. This position defeats the

22 very purpose of having the Buy/Sell. Indeed, if the parties intended for the shares to be owned by

23 the last two shareholders and not the last person standing, the Buy/Sell Agreement would have

24 provided. It does not.

25 In any case, under established California law, if the contract is susceptible of more than

26 one interpretation, the Court must consider extrinsic evidence for the purposes of interpreting the

27 contract. Fremont Indem. Co. v. Fremont Gen. Corp., 148 Cal. App. 4th 97, 114 (2007) (“A court

28 determining whether a contract is ambiguous must first consider extrinsic evidence offered to

368317.7 5
OPPOSITION TO DEMURRER TO COMPLAINT
 1 prove the parties’ mutual intention. If the court determines that the contract is reasonably

2 susceptible of an interpretation supported by extrinsic evidence, the court must admit that evidence

3 for purposes of interpreting the contract.”) Not only does Defendant’s interpretation of the

4 Buy/Sell make no sense, it would turn California’s pleading rules on their head if the Court were

5 to accept Defendant’s reading of a contract on demurrer without even considering extrinsic

6 evidence.

7 Indeed, the evidence is overwhelming that Steely Dan implemented the Buy/Sell procedure

8 for over 40 years, purchasing the shares of the band’s prior terminated shareholders. Plaintiffs

9 request that the Court take judicial notice of that evidence here; and intend to submit this—and

10 other—evidence to the Court in support of a summary judgment motion to enforce the Buy/Sell

11 and demonstrate that its enforcement was the intent of all parties. (See Request for Judicial Notice

12 (“RJN”), at Exs. 1 - 4.)

13 Defendant’s reading of the Agreement is far-fetched, to say the least. Section 5 provides

14 that the Agreement shall terminate “upon the occurrence of any event as a result of which all of

15 the outstanding stock of the Corporation will be owned by a single stockholder.” Becker’s death

16 resulted in the triggering of the Buy/Sell. Once Steely Dan has repurchased Becker’s shares, all of

17 the stock of the Corporation will be owned by a single stockholder and then, and only then, will

18 the Agreement terminate. The obvious intent was to enable the last remaining shareholder—here,

19 Fagen—to control and carry on Steely Dan.

20 If Becker’s death already terminated the Agreement, as Defendant contends, there would

21 be no purchase and sale, and the stock of the Corporation would never “be owned by a single

22 stockholder.” If the stock of the Corporation would never be owned by a single stockholder, then

23 Section 5 would never be triggered. Defendant’s interpretation contradicts itself and would render

24 Section 5 a nullity.

25 Moreover, Defendant does not dispute that under Section 1 of the Buy/Sell Agreement, the

26 death of a band member triggers a purchase and sale—without exception. If Becker’s death also

27 triggers Section 5, as Defendant contends, then Becker’s death would simultaneously trigger a

28 Buy/Sell and a termination. This would put two sections of the Agreement in conflict with each

368317.7 6
OPPOSITION TO DEMURRER TO COMPLAINT
 1 other, and makes no sense either.

2 Defendant conjures convoluted “chronological interplay” and “temporal relationship”

3 arguments as to the meaning of Section 5, which are unsupported by law, rest on faulty

4 assumptions, and defy common sense. Defendant suggests that Section 5 could have been written

5 more clearly—but there certainly are ways Section 5 could have been drafted if it means what

6 Defendant claims.

7 By making all sorts of arguments about the interpretation of the Buy/Sell, Defendant

8 concedes that there are ambiguities in the Agreement. Ambiguity means that the demurrer must

9 be overruled. Fremont Indem. Co., 148 Cal. App. 4th at 114-15 (improper for a court to interpret

10 the meaning of a contract on demurrer “without allowing the parties an opportunity to present

11 extrinsic evidence . . .”).

12 Finally, Defendant contends that “fairness” favors its interpretation of the contract. This

13 argument really asks the Court to conclude, based on Defendant’s say-so, that Defendant is right

14 as a matter of law. But the band members bargained for rights in the Buy/Sell Agreement based

15 on their wish for the band to continue in the hands of surviving band members, not their family

16 members. Defendant already has received its fair share of Steely Dan’s revenues based on

17 Becker’s contributions to the band while he was alive.

18 It would be unfair for one band member—in this case Fagen—to continue to tour as Steely

19 Dan and do all the work while a deceased band member’s heirs reap half the benefits. That is why

20 the Buy/Sell Agreement exists, and why Becker signed it.

21 The demurrer should be overruled.

22 II. FACTS
23 Fagen and Becker collaborated in a partnership as songwriters and performers for almost

24 50 years. (Compl., at 1.) They worked as members of Steely Dan, an incredibly successful world

25 famous band. (Id. at 1, 2.)

26 When Steely Dan formed in 1972, the six original band members, including Fagen and

27 Becker, executed the Buy/Sell Agreement. (Id. at 3.) The Buy/Sell Agreement provides that

28 whenever a member of the Band either dies or terminates his employment with Steely Dan, Steely

368317.7 7
OPPOSITION TO DEMURRER TO COMPLAINT
 1 Dan shall purchase all of that member’s shares of Steely Dan. (Id.) The Buy/Sell provision is

2 mandatory. (Id.) When the first four of the six band members were terminated, Steely Dan

3 purchased, and the terminated band members sold, their outstanding shares of Steely Dan. (See

4 RJN, at Exs. 1-4.) Prior to 2017, Becker and Fagen were the only remaining shareholders.

5 (Compl., at 4.)

6 On September 3, 2017, Walter Becker passed away. (Id.) Four days after Becker’s death,

7 Defendant’s representatives sent Fagen a letter stating that “[w]e wanted to put you on notice that

8 the Buy/Sell Agreement dated as of October 31, 1972 is of no force or effect.” (Id. at 5.) By this

9 lawsuit, Fagen, acting on behalf of Steely Dan as its sole remaining officer and director, seeks to

10 enforce the mandatory provision of the Buy/Sell Agreement requiring Steely Dan to purchase

11 Defendant’s shares. (Id. at 6.)

12 Defendant contends that Section 5 of the Buy/Sell Agreement precludes the Complaint’s

13 allegation as to the meaning of the Buy/Sell Agreement. (Dem., at 1:27-28.) Section 5 of the

14 Buy/Sell Agreement provides: “This agreement shall automatically terminate and be of no further

15 force and effect if the Corporation shall be dissolved or upon the occurrence of any event as a

16 result of which all of the outstanding stock of the Corporation will be owned by a single

17 stockholder.” (Compl. Ex. A, Section 5.)1

18 III. LEGAL STANDARD

19 Courts must liberally construe complaints, favoring substance over form, with the ultimate

20 goal of trying cases on their merits. Cal. Civ. Proc. Code § 452; Cal. Civ. Code § 3528;

21 Youngman v. Nev. Irrigation Dist., 70 Cal. 2d 240, 244-45 (1969). A demurrer tests the pleadings

22 and not the evidence of the facts alleged. City of Atascadero v. Merrill Lynch, Pierce, Fenner &

23 Smith, Inc., 68 Cal. App. 4th 445, 459 (1998). All pleaded allegations must be accepted as true.

24 Serrano v. Priest, 5 Cal. 3d 584, 591 (1971).

25 When reviewing a demurrer to a breach of contract claim, a court must determine only

26

27 1
Plaintiffs do not oppose Defendant’s request for judicial notice of the Buy/Sell Agreement,
28 which was attached to the Complaint and forms the basis for this action.

368317.7 8
OPPOSITION TO DEMURRER TO COMPLAINT
 1 whether the agreement is “reasonably susceptible” to the meaning ascribed to it in the complaint.

2 Klein v. Chevron U.S.A., Inc., 202 Cal. App. 4th 1342, 1384-85 (2012) (“So long as the pleading

3 does not place a clearly erroneous construction upon the provisions of the contract, in passing

4 upon the sufficiency of the complaint, [the court] must accept as correct plaintiff’s allegations as

5 to the meaning of the agreement.” (citations omitted)).

6 IV. ARGUMENT
7 A. The Terms Of The Buy/Sell Agreement Demonstrate That The Agreement
8 Will Terminate Only After Defendant Sells, And Steely Dan Purchases,
9 Defendant’s Shares
10 Defendant does not dispute that the Buy/Sell Agreement—specifically, Section 1(a)—
11 creates a process by which Steely Dan purchases outstanding shares of Steely Dan upon the death

12 or termination of employment of one of the signatories to the Buy/Sell Agreement. (Dem., at 6:4-

13 5.) Walter Becker, of course, is one of the signers of the Buy/Sell.

14 Defendant’s demurrer relies solely on Section 5. Section 5 of the Buy/Sell Agreement

15 provides that the “agreement shall automatically terminate and be of no further force and effect if

16 the Corporation shall be dissolved or upon the occurrence of any event as a result of which all of

17 the outstanding stock of the Corporation will be owned by a single stockholder.”

18 The intention of a contract is to be ascertained from its language where possible. Here, the
19 event which will result in all of the outstanding stock of the Corporation being owned by a single

20 stockholder is the purchase and sale that this lawsuit seeks to enforce. The language of Section 5

21 requires the Buy/Sell Agreement to terminate immediately after Defendant sells, and Steely Dan

22 purchases, the outstanding stock of the Corporation.

23 This final Buy/Sell will result in the outstanding stock being owned by a single

24 stockholder—Donald Fagen. Once that has happened, the Agreement will no longer be needed

25 and will terminate by virtue of Section 5.

26 B. Defendant’s Interpretation Of Section 5 Fails

27 Defendant’s interpretation of Section 5 does not make sense. Defendant argues that the

28 language “any event as a result of which all of the outstanding stock of the Corporation will be

368317.7 9
OPPOSITION TO DEMURRER TO COMPLAINT
 1 owned by a single stockholder” must mean the death of Walter Becker. (Dem., at 5:18-6:3.)

2 Defendant contends that because the Buy/Sell Agreement terminated at the time of Becker’s death,

3 no sale and purchase could follow.

4 First, if Defendant were correct, then Becker’s death is not an event which will result in all

5 the outstanding stock being owned by a single stockholder—because the final purchase and sale

6 will never occur. Under Defendant’s interpretation, no event will ever result in all the stock to be

7 owned by a single stockholder—because the Agreement will terminate before that ever happens.

8 If no event will ever cause all shares to be owned by a single shareholder, then no event will ever

9 trigger Section 5. Defendant’s interpretation of Section 5 is nonsensical.

10 Second, Defendant’s interpretation creates an internal contradiction between Section 1(a)

11 and Section 5. Section 1(a) requires—as Defendant does not dispute—that Steely Dan purchase,

12 and an outstanding shareholder sell back, outstanding shares of Steely Dan following a death or

13 termination of employment. If Defendant is correct, Section 5 causes the Agreement to terminate

14 upon Becker’s death, and so the repurchase can never occur.

15 But Section 1(a) requires a Buy/Sell—not a termination—upon Becker’s death. An

16 agreement cannot be triggered and terminate at the same the time. Section 1(a) therefore cannot

17 apply if Defendant is right about Section 5. See, e.g., Dameron Hosp. Ass’n v. AAA N. Cal.,

18 Nev. & Utah Ins. Exch., 229 Cal. App. 4th 549, 568 (2014) (rejecting interpretation of contract

19 that introduced “internal inconsistency”).

20 Defendant has provided no reasonable interpretation of the Buy/Sell Agreement. It plainly

21 was not the intent to tether Donald Fagen to Walter Becker’s widow on a 50-50 basis for the rest

22 of his, and Steely Dan’s life.

23 C. Defendant’s Arguments, At Best, Suggest Ambiguity, Which Would Require

24 That The Court Overrule This Demurrer
25 Defendant’s arguments, at best, suggest ambiguity in the Buy/Sell Agreement. Where a

26 contract is ambiguous, a demurrer based on the contract’s meaning must be overruled. See, e.g.,

27 Aragon-Haas v. Family Sec. Ins. Servs., Inc., 231 Cal. App. 3d 232, 239 (1991) (reversing trial

28 court’s order sustaining demurrer to breach of ambiguous contract because it was necessarily

368317.7 10
OPPOSITION TO DEMURRER TO COMPLAINT
 1 “reasonably susceptible of the meaning alleged by plaintiff”); Rutherford Holdings, LLC v. Plaza

2 Del Rey, 223 Cal. App. 4th 221, 229-30 (2014) (same); Fremont Indem. Co., 148 Cal. App. 4th at

3 115-16 (reversing trial court’s order sustaining demurrer because “a demurrer cannot decide a

4 question that may depend on disputed facts” and cannot “properly foreclose the introduction of

5 extrinsic evidence” with respect to an ambiguous contract); S. Pac. Land Co. v. Westlake Farms,

6 Inc., 188 Cal. App. 3d 807, 823 (1987) (vacating trial court’s order sustaining demurrer because

7 “facial ambiguity” in contract “invites the admission of extrinsic evidence to aid in the

8 interpretation of these provisions”).2

9 Plaintiffs have attached a request for judicial notice to this opposition brief. The request

10 attaches evidence that Steely Dan repurchased the outstanding shares owned by all previously

11 terminated shareholders. This evidence is just some of what Plaintiffs intend to present on

12 summary judgment to demonstrate that any ambiguities in the Agreement should be decided in

13 favor of enforcing the Buy/Sell. The Court must overrule the demurrer and consider this—and

14
2
Defendant asks this Court to find that Section 5 of the Buy/Sell Agreement can have only one
15 meaning as a matter of law, without citing a single case with comparable contractual language.

16 Most of Defendant’s brief is entirely unsupported; and where Defendant does cite cases, they are
inapposite cases—primarily insurance cases and class actions—used by Defendant for
17 unremarkable propositions of law. Jones v. Grewe, 189 Cal. App. 3d 950, 957 (1987) (insurance
agents had successfully demurred to breach of fiduciary duty claim for failure to provide coverage
18 where insurer had no duty of care relating to the alleged facts); Klein, 202 Cal. App. 4th at 1385-
86 (gasoline company had successfully demurred to consumer class action breach of contract
19 claim where class’ interpretation of word “gallon” in contract included “a temperature

20 component”); George v. Auto. Club of S. Cal., 201 Cal. App. 4th 1112, 1130 (2011) (automobile
insurer had successfully demurred to class action where plaintiffs had ascribed a meaning to a
21 specific term “without alleging any words of the policy, ambiguous or otherwise, that support that
construction”); Hervey v. Mercury Cas. Co., 185 Cal. App. 4th 954, 966-67 (2010) (affirming trial
22 court’s sustaining of demurrer by automobile insurer based on offset language that appeared in
large, capital letters and would be expected in such an insurance contract); City of Dinuba v.
23
County of Tulare, 41 Cal. 4th 859, 862-63 (2007) (holding that California county was not immune
24 from suit under Tort Claims Act and that writ of mandamus was available to enforce county’s
responsibility to properly allocate tax revenue); Aubry v. Tri-City Hosp. Dist., 2 Cal. 4th 962, 970
25 (1992) (holding that the Tort Claims Act does not provide a cause of action for shortfalls in wages
and penalties arising therefrom); McAllister v. County of Monterey, 147 Cal. App. 4th 253, 262-63
26 (2007) (affirming trial court’s sustaining demurrer to writ of mandate action challenging county’s
approval of coastal development project under CEQA); M & G Polymers USA, LLC v. Tackett,
27
135 S. Ct. 926, 937 (2015) (vacating permanent injunction entered after bench trial requiring
28 employer to restore benefits).

368317.7 11
OPPOSITION TO DEMURRER TO COMPLAINT
 1 other—extrinsic evidence.

2 1. Defendant’s “Chronological Interplay” Theory Fails

3 Defendant asserts that the “chronological interplay between Sections 1 and 5 supports the

4 interpretation that Mr. Becker’s death terminated the Buy/Sell Agreement under Section 5.”

5 (Dem., at 6:4-23.) As an initial matter, this argument, unsupported by any law, at best suggests a

6 possible way to read the Agreement. It cannot help Defendant meet its burden, on demurrer, to

7 show that the Complaint’s interpretation of the Agreement is “clearly erroneous.”

8 This argument wrongly assumes that there is some relationship between the series of steps

9 in Section 1 of the Buy/Sell Agreement and the automatic nature of Section 5. (Id. at 6:7-15.)

10 There is nothing inconsistent about one section of an agreement reciting a series of steps and the

11 other being automatic.

12 Moreover, just like Defendant’s interpretation of Section 5, this argument contradicts

13 itself. The whole basis for the argument is that Section 5’s use of the term “will” gives

14 “recognition to the fact that a death… triggers the sequence of events required to effectuate the

15 stock repurchase, which necessarily takes place at a future time.” (Id. at 6:15-18.) But as

16 discussed in the prior section, Defendant’s argument assumes that the stock repurchase will never

17 happen. The “chronology” theory makes no sense. There cannot be an earlier of two events if one

18 of them is never going to happen.

19 2. Defendant’s “Alternative Language” Theory Fails

20 Defendant argues that there are easier ways that Section 5 could have been drafted to mean

21 what the Complaint alleges. (Dem., at 7:2-23.) Defendant argues that if Section 5 were meant to

22 terminate after the stock buyback, different language could have been used. (Id. at 7:13-23.) But

23 this argument goes nowhere. Clearer language could also have been used if Defendant’s

24 interpretation were correct:

25 Defendant’s suggestion for clearer, simpler Plaintiffs’ suggestion for clearer, simpler
26 language to support Plaintiffs’ interpretation language to support Defendant’s
27 interpretation
28

368317.7 12
OPPOSITION TO DEMURRER TO COMPLAINT
 1 “When there is only one Stockholder, this
2 agreement shall automatically terminate.”
3 (Dem., at 7:16-17.)
4 “This agreement shall terminate automatically
5 following any stock buyback if the
6 Corporation then has only one Stockholder.”
7 (Id. at 7:18-19.)
8 “This agreement shall terminate automatically
9 upon one Stockholder owning all the shares.”
10 (Id. at 7:20-21.)
11
“When there are only two Stockholders, this
agreement shall automatically terminate.”
“This agreement shall terminate automatically
prior to any stock buyback which will result in
the Corporation having only one stockholder.”
“This agreement shall terminate automatically
upon two Stockholders owning all the shares.”

12 There are also other, clearer ways to say what Defendant believes Section 5 says, for
13 example: “This agreement shall not require a buy back that results in one owner of shares”; “This

14 agreement shall terminate at the time of a death or termination of employment that would result in

15 a single shareholder”; or “There shall be no purchase and sale pursuant to this Agreement which

16 would result in one person owning all shares.”

17 One can always speculate about a better way to have drafted a contract. Here, the only
18 reasonable interpretation of Section 5, as discussed in Section IV.A, is that the final purchase and

19 sale results in termination.

20 3. Defendant’s “Use of Different Words” Theory Fails

21 Defendant argues that Plaintiff’s interpretation of the Buy/Sell Agreement does not make
22 sense because Section 5 does not expressly reference the purchase and sale as the event that

23 triggers the termination of the Agreement. (Dem., at 7:25-8:15.) Once again, Defendant cites no

24 law; and once again, Defendant’s argument does not make sense. Section 5 does not reference

25 death or termination of employment either—the two events that Defendant believes trigger

26 termination. Further, the fact that previous sections discuss purchase or sale is irrelevant.

27 Previous sections discuss purchase or sale in different contexts than termination, and also

28 repeatedly discuss, among others, death (Sections 1(a) and 3(iii)); book value (Sections 1(a),

368317.7 13
OPPOSITION TO DEMURRER TO COMPLAINT
 1 1(b)(2), 1(d)); and permitted transfers (Sections 3 and 4).

2 4. Defendant’s “Any Event” Theory Is Wrong Too

3 Defendant argues that “any event” cannot apply to the final purchase and sale, which

4 Defendant claims is the “only qualifying event.” (Dem., at 8:10-15.) Defendant is wrong for a

5 number of reasons. First, “any event” can easily refer to any purchase or sale of stock resulting in

6 one stockholder owning all shares; if the final shareholder was going to be Donald Fagen, that

7 would be a different stock transfer—and thus a different “event”—than if Walter Becker (or some

8 other signatory) was going to be the final shareholder.

9 Secondly, “any” can refer to one event. See, e.g., Merriam-Webster Dictionary (defining

10 “any” as “one or some indiscriminately of whatever kind” or “one, some, or all indiscriminately

11 of whatever quantity”) Finally, the “any event” language is equally confusing under Defendant’s

12 interpretation, as Defendant contends that only two events trigger termination: death or

13 termination of employment. “Any” does not typically refer to two things any more than it refers

14 to a single thing.

15 5. Defendant’s “Temporal Relationship” Theory Fails

16 Defendant argues that the Complaint’s interpretation of Section 5 “violates the temporal
17 relationship” that Defendant claims Section 5 specifies. (Dem., at 8:16-26.) Specifically,

18 Defendant makes the strained argument that a repurchase would simultaneously result in there

19 being a single stockholder, thereby defying the use of the word “will” in Section 5, which

20 Defendant contends means that the triggering event needs to precede the fact of a single

21 stockholder.

22 First, Defendant’s argument fails on its face. A stock repurchase would not be

23 simultaneous with there being a single shareholder. There will only be a single shareholder after

24 and as a result of a stock repurchase. If A sells her car to B, B is not the owner of the car until the

25 sale is complete. If A sells her house to B, the sale will result in B being the owner of the house.

26 Secondly, Defendant assumes that the “will” in Section 5 means that later clause must

27 follow the first clause. “Will” typically refers to the future. But “will” as used in this agreement

28 could just as easily refer to the fact that the events contemplated are in the future relative to the

368317.7 14
OPPOSITION TO DEMURRER TO COMPLAINT
 1 time the Agreement was entered into.

2 Defendant’s one case on this point, Glob. Modular, Inc. v. Kadena Pac., Inc., 15 Cal. App.

3 5th 127 (2017), is both factually and procedurally remote from this case. The Glob. Modular

4 decision followed a ruling on a summary judgment motion as to insurance coverage and a jury

5 verdict finding insurance coverage less an offset for a settlement payment. Id. at 131. The Court

6 of Appeal analyzed an exclusion in the insurance contract for “[t]hat particular part of real

7 property on which you . . . are performing operations,” and concluded that the exclusion applies

8 “only to damage caused during physical construction activities.” Id. at 136-37. It is telling that

9 the only case Defendant could find to support this demurrer argument is an insurance contract case

10 analyzing the scope of coverage when reviewing a judgment after jury verdict.

11 D. Defendant’s Forfeiture Argument Is Factual And Erroneous

12 Defendant takes a page and a half of its demurrer arguing that the Complaint’s
13 interpretation would result in a forfeiture, and that this result would be “unjust,” “shockingly

14 harsh,” and would result in “inequity.” (Dem., at 8:27-10:9.)

15 First, this argument is premature and improper on demurrer. Defendant is asking the Court
16 to make a judgment call based on the circumstances, which courts do not do on demurrer. See,

17 e.g., SKF Farms v. Superior Court, 153 Cal. App. 3d 902, 905 (1984) (issuing writ of mandate to

18 reverse sustaining of demurrer because the “only issue involved in a demurrer hearing is whether

19 the complaint, as it stands, unconnected with extraneous matters, states a cause of action”).

20 Significantly, Defendant cites no demurrer cases in support of this argument—all cases

21 Defendant cites were procedurally further along—after evidence had been presented. Boston LLC

22 v. Juarez, 245 Cal. App. 4th 75, 80, 88 (2016) (reversing trial court’s judgment, following bench

23 trial, in favor of landlord who had been sued for unlawful detainer); Ballard v. MacCallum, 15

24 Cal. 2d 439, 445 (1940) (affirming judgment following trial on action to cancel a trust); Bank of

25 the W. v. Superior Court, 2 Cal. 4th 1254, 1277 (1992) (reinstating trial court’s granting of

26 summary judgment in favor of a liability insurer where damage was not within policy).

27 Moreover, the equities do not favor Defendant. As an initial matter, when a party

28 challenges the enforcement of a contract based on whether its performance is just and fair, the

368317.7 15
OPPOSITION TO DEMURRER TO COMPLAINT
 1 analysis must be based on the equities at the time the contract was made. See, e.g., Hastings v.

2 Matlock, 171 Cal. App. 3d 826, 839-40 (1985) (affirming specific performance of contract despite

3 changed circumstances since contract was made). Defendant seeks to invalidate a 1972 contract

4 based on alleged equities today. Defendant’s argument does not even get off the ground.

5 Defendant ignores that the parties to the Buy/Sell Agreement negotiated important

6 contractual rights. The Buy/Sell Agreement’s language indicates the clear intent by all parties to

7 have Steely Dan continue in the hands of surviving band members—not to revert to a band

8 member’s widow or estate. See Buy/Sell Agreement Section 1a (requiring sale and purchase of

9 shares from “terminated stockholder, or his executor, administrator or personal representative, as

10 well any person to whom Terminated Stockholder has transferred any of his shares of stock in the

11 Corporation prior to such death or termination…”); Section 3 (requiring that any gift of shares to

12 spouse or issue be “expressly subject to the terms and provisions hereof,” and that such family

13 member “shall be bound by the terms and provisions of this agreement”).

14 As the evidence in this case will show, Walter Becker and Donald Fagen both intended and

15 wanted the band to continue in the hands of whoever survived, not be split with heirs—a

16 completely reasonable wish that is embodied in the Buy/Sell Agreement. There is nothing

17 inequitable about Donald Fagen continuing as Steely Dan and having its rights because he

18 outlived his partner. See Ballard, 15 Cal. 2d at 443 (cited by Defendant at 9:28-10:4) (“There is

19 nothing inequitable in a bargain merely because it turns out better for one party than the other.”).

20 There is no forfeiture here. Plaintiffs are not “stripping” Walter Becker of anything (Dem.,

21 at 9:16.). Plaintiffs are not “reaping a windfall” either. (Id. at 10:7.) Walter Becker passed away

22 on September 3, 2017. He shared 50% of Steely Dan up until his death. The gravamen of the

23 Buy/Sell Agreement is that Steely Dan is to remain with the living band members. Nothing is

24 being forfeited because no one besides the living band members have the right to Steely Dan.

25 Defendant cannot end this case before it begins by baldly asserting that the equities are in

26 its favor. The Court should reject Defendant’s invitation to hold, as a matter of law, that

27 Defendant is in the right—when no one has had the opportunity to present any evidence. The

28 evidence will refute Defendant’s conclusory claims. Plaintiffs have submitted a request for

368317.7 16
OPPOSITION TO DEMURRER TO COMPLAINT
 1 judicial notice with this opposition, attaching evidence that Steely Dan repurchased the shares held

2 by the prior four terminated signatories to the Buy Sell Agreement.

3 The evidence will show, among other things, that (1) Defendant is entitled to Becker’s

4 share of revenue based on any Steely Dan work that Walter Becker participated in, and that right is

5 not at issue in this case; (2) this case is an attempt by Walter Becker’s widow to obtain an undue,

6 unjust enrichment by stripping Plaintiff Fagen of all the good will he will develop for Steely Dan

7 for the remainder of his lifetime (he plans to continue to tour as Steely Dan, starting this spring);

8 (3) Defendant’s position is contrary to Walter Becker’s intent; (4) Defendant’s position is contrary

9 to the past practice of Becker, Fagen and other band members; and (5) Defendant’s position is
10 contrary to both the letter and spirit of the Buy Sell Agreement and the Fagen/Becker partnership.
11 V. CONCLUSION
0
0

12 Defendant’s demurrer should be overruled.

C

~ 13

~ ~: 14 DATED: February 6, 2018 Respectully S bmitted,

IjI~. ~

18
:::B~ I
4~’iuis R. MILLER
Attorneys for Plaintiffs
STEELY DAN, INC. and DONALD FAGEN
19
20

21

22

23

24

25
26

27

28

368317.7 17
OPPOSITION TO DEMURRER TO COMPLAiNT
 1 PROOF OF SERVICE

2 STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

3 At the time of service, I was over 18 years of age and not a party to this action. I am
employed in the County of Los Angeles, State of California. My business address is 1999 Avenue
4 of the Stars, Suite 1000, Los Angeles, CA 90067.

5 On February 6, 2018, I served true copies of the following document(s) described as:

6 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S DEMURRER TO COMPLAINT

7 on the interested parties in this action as follows:

8 SERVICE LIST

9 Scott P. Cooper Attorneys for Defendant

Jennifer L. Jones DELIA CIOFFL as trustee of THE WALTER
10 Kelly M. Curtis BECKER REVOCABLE TRUST
PROSKAUER ROSE LLP
2049 Century Park East, 32nd Floor Tel: (310) 557-2900
12 Los Angeles, CA 90067-3206 Fax: (310) 557-2193
Email: scooper@proskauer.com
13 j1jones@proskauer.com
kcurtis@proskauer.com
~ 14
z ~ 1 Jay Waxenberg Co-Counsel for Defendant
David M. Lederkramer (Pro Hac Vice Pending) DELIA CIOFFL as trustee of THE WALTER
16 PROSKAUER ROSE LLP BECKER REVOCABLE TRUST
Eleven Times Square
17 New York, NY 10036 Tel: (212) 969-3000
Fax: (212) 969-2900
18 Email: jwaxenberg @proskauer. corn

19 dlderkramer@proskauer.com

20 BY OVERNIGHT DELIVERY: I enclosed said document(s) in an envelope or package

provided by the overnight service carrier and addressed to the persons at the addresses listed in the
21 Service List. I placed the envelope or package for collection and overnight delivery at an office or
a regularly utilized drop box of the overnight service carrier or delivered such document(s) to a
22 courier or driver authorized by the overnight service carrier to receive documents.

23 I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
24 .
Executed on February 6, 2018, at Los Angeles, California.

renda M. Riding
28

368317.7 18
OPPOSITION TO DEMURRER TO COMPLAINT