Kourtis v. Cameron ( 2005 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FILIA KOURTIS; CON KOURTIS, 
Plaintiffs-Appellants,
v. No. 03-56703
JAMES CAMERON; INTERNATIONAL  D.C. No.
CV-02-02906-WMB
CREATIVE MANAGEMENT; MARIO P.
KASSAR; JEFFREY BERG; JOSEPH OPINION
ROSENBERG,
Defendants-Appellees.

Appeal from the United States District Court
for the Central District of California
William Matthew Byrne, Senior District Judge, Presiding
Argued and Submitted
May 4, 2005—Pasadena, California
Submission Withdrawn May 9, 2005
Resubmitted August 8, 2005
Filed August 15, 2005
Before: Diarmuid F. O’Scannlain and
Kim McLane Wardlaw, Circuit Judges, and
Charles C. Lovell,* District Judge.
Opinion by Judge O’Scannlain
*The Honorable Charles C. Lovell, Senior United States District Judge
for the District of Montana, sitting by designation.
10573
KOURTIS v. CAMERON 10577
COUNSEL
Patricia J. Barry, Los Angeles, California, argued the cause
for the appellants and filed the briefs.
Marisa G. Westervelt, Christensen, Miller, Fink, Jacobs, Gla-
ser, Weil & Shapiro LLP, Los Angeles, California, and
Charles N. Shephard, Greenberg, Glusker, Fields, Claman,
Machtinger & Kinsella LLP, Los Angeles, California, argued
the cause for the appellees; Louis R. Miller, Christensen, Mil-
ler, Fink, Jacobs, Glaser, Weil & Shapiro LLP, Los Angeles,
California, and Howard L. Horwitz, Oberstein, Kibre & Hor-
witz, LLP, Los Angeles, California, were on the briefs.
10578 KOURTIS v. CAMERON
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether the creators of the yet-unproduced
film The Minotaur are collaterally estopped from pursuing a
copyright infringement claim against the producers of Termi-
nator II.
I
In 1987, Filia and Constantinos Kourtis developed the con-
cept for a film entitled The Minotaur, which details the
exploits of a half-man, half-bull that can transform itself into
various human and inanimate forms. The Kourtises set forth
their ideas in a thirty-page “treatment” that provides a synop-
sis of the prospective film. They registered this material with
the Worldwide Register of Copyrights and then hired William
Green to write a screenplay based upon their treatment. The
agreement between Green and the Kourtises provided that the
Kourtises would own the screenplay’s rights.
In 1989, the Kourtises began to shop the screenplay around
to various Hollywood production companies. Jeffrey Berg, an
employee of International Creative Management (“ICM”),
received a copy, and he informed the Kourtises that he would
share the materials with film maker James Cameron, who was
an ICM client. Cameron contacted the Kourtises and initially
expressed an interest in The Minotaur, but ultimately neither
Cameron nor anyone else agreed to produce the project.
In 1991, Cameron released the film Terminator II: Judg-
ment Day, which—like The Minotaur—features a character
that can transform its appearance into both human and nonhu-
man forms. Green responded by filing a copyright infringe-
ment action in the United States District Court for the Central
District of California against Cameron and other persons asso-
ciated with Terminator II. Green v. Schwarzenegger, No. CV
KOURTIS v. CAMERON 10579
93-5893 (WMB) (C.D. Cal. filed Sept. 29, 1993). Green
alleged that he—not the Kourtises—owned the copyright to
the Minotaur screenplay and that Cameron had misappropri-
ated The Minotaur’s concept of a shape-changing character.
Although Filia Kourtis was deposed by Cameron, the Kour-
tises did not intervene in Green’s suit. The court ultimately
found that Terminator II and The Minotaur are not substan-
tially similar and granted summary judgment to Cameron and
the other defendants on Green’s copyright infringement claim.
Green v. Schwarzenegger, No. CV 93-5893 (WMB) (C.D.
Cal. July 1, 1994), at 8.
The Kourtises, who reside in Australia, then brought suit
against Green in an Australian court to determine ownership
of the Minotaur materials. After the Kourtises prevailed in
that action, see Kourtis v. Green, No. 8497 (Vict. Mar. 19,
1998), they filed their own suit against Cameron1 in the Cen-
tral District of California, alleging copyright infringement,
breach of implied contract, breach of oral contract, and breach
of confidence. Like Green, the Kourtises alleged that Cam-
eron had utilized The Minotaur’s shape-changing concept in
Terminator II without providing payment or attribution.
The district court granted Cameron’s motion to dismiss the
Kourtises’ complaint. The court concluded that the Kourtises
are collaterally estopped by the Green decision from relitigat-
ing the copyright infringement issue. The court further held
that the Kourtises’ state law claims are barred by the statute
of limitations. The Kourtises timely appealed.
1
The Kourtises also named Berg and ICM as defendants, as well as
Mario Kassar, one of Terminator II’s producers; Joseph Rosenberg, an
ICM employee; and William Wisher, coauthor of Terminator II. Wisher
is not a party to this appeal. The defendants are collectively referred to as
“Cameron.”
10580 KOURTIS v. CAMERON
II.
The Kourtises argue that the Green litigation does not pre-
clude their copyright infringement claim because Green’s
allegations differ from their own and because they were not
a party to the earlier proceedings.2
A
[1] The doctrine of collateral estoppel (or issue preclusion)
“prevents relitigation of issues actually litigated and necessar-
ily decided, after a full and fair opportunity for litigation, in
a prior proceeding.” Shaw, 56 F.3d at 1131. A federal court
decision has preclusive effect where
(1) the issue necessarily decided at the previous pro-
ceeding is identical to the one which is sought to be
relitigated; (2) the first proceeding ended with a final
judgment on the merits; and (3) the party against
whom collateral estoppel is asserted was a party or
in privity with a party at the first proceeding.
2
As a preliminary matter, the Kourtises assert that the district court con-
verted Cameron’s motion to dismiss into a summary judgment motion by
considering extraneous materials and that the judgment should therefore
be reversed because they were not afforded an opportunity for discovery.
This contention is unavailing because the district court limited its analysis
to materials properly within the purview of a motion to dismiss.
The district court’s consideration of an unpublished court order from the
Green litigation was appropriate because court records from related pro-
ceedings can be taken into account without converting a motion to dismiss
into a summary judgment motion. See Shaw v. Hahn, 56 F.3d 1128, 1129
n.1 (9th Cir. 1995) (“In deciding whether to dismiss a claim under Fed.
R. Civ. P. 12(b)(6), a court may look beyond the plaintiff’s complaint to
matters of public record.”). The district court also properly considered a
chart of alleged similarities between The Minotaur and Terminator II
because that material was appended to the Kourtises’ complaint. See Knie-
vel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (“when ruling on a
motion to dismiss, [a court] must disregard facts that are not alleged on
the face of the complaint or contained in documents attached to the com-
plaint”).
KOURTIS v. CAMERON 10581
Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir.
2000).
We address these elements in turn.
1
[2] There are several factors that guide our determination
of whether an issue litigated in a prior case is identical to one
raised in later proceedings. Relevant considerations include
whether there is a substantial overlap between the evidence in
the two cases and whether both suits involve application of
the same rule of law. See Resolution Trust Corp. v. Keating,
186 F.3d 1110, 1116 (9th Cir. 1999).
Green’s suit alleged that Cameron infringed upon The
Minotaur’s copyright by incorporating a shape-changing char-
acter into Terminator II.3 According to the district court’s
written decision in that case, Green “allege[d] that in August
1989, he submitted his screenplay ‘The Minotaur’ to Jeffrey
Berg of ICM. (‘Draft 1’). On January 31, 1990, Joe Rosen-
berg at ICM expressed interest and requested a second draft
(‘Draft 2’), which plaintiff provided. About two years later,
ICM and other defendants released ‘Terminator 2.’ Thereaf-
ter, plaintiff brought this suit.” Green, No. CV 93-5893
(WMB), at 1-2. Green argued that the “defendants have cop-
ied several unique aspects of his screenplays,” including the
Minotaur’s ability to change shape. Id. at 6. After reviewing
the screenplays, the Green court granted summary judgment
to the defendants because no rational trier of fact could have
3
We grant Cameron’s Request for Judicial Notice and Supplemental
Request for Judicial Notice of materials submitted in the Green litigation.
See Shaw, 56 F.3d at 1129 n.1 (taking judicial notice of court records as
part of a collateral estoppel inquiry). The Kourtises’ Motion to Take Judi-
cial Notice is denied as untimely because the Kourtises did not comply
with our instruction that such materials be submitted within fifteen days
of the date of the supplemental briefing order.
10582 KOURTIS v. CAMERON
found substantial similarity between The Minotaur and Termi-
nator II. Id. at 8.
[3] The sole basis for the Kourtises’ copyright infringement
claim is the allegation that Cameron misappropriated The
Minotaur’s shape-changing concept for use in Terminator II.
See Compl. ¶ 53 (“The Minotaur Project and Term. II are
more similar than Terminator I (‘Term. I’) and Term. II are.
There was no ‘morphing’ i.e., metamorphosis of bodies or
parts of bodies into other objects in Term. I as there is in the
Minotaur Project and Term. II.”); id. ex. 1 (comparing shape-
changing scenes from Terminator II and the Minotaur script).
Notwithstanding the substantial overlap between their argu-
ments and those advanced by Green, the Kourtises contend
that collateral estoppel does not attach because their copyright
claim is premised upon both the original Minotaur treatment
and the screenplay, whereas Green relied exclusively upon the
screenplay. The Minotaur treatment, however, contributes
nothing new to the infringement inquiry because the treat-
ment’s shape-changing elements are also prominently fea-
tured in the screenplay considered by the Green court. Indeed,
Green’s screenplay was wholly based upon the Kourtises’
treatment.
[4] The copyright infringement claim asserted by the Kour-
tises is therefore identical to the one adjudicated in the Green
litigation.
2
[5] Collateral estoppel does not attach merely because the
same issue is raised in successive suits. Indeed, “[w]e have in
this nation a deep-rooted historic tradition that everyone
should have his own day in court,” and we accordingly pre-
sume that “a judgment or decree among parties to a lawsuit
resolves issues as among them, but it does not conclude the
rights of strangers to those proceedings.” Headwaters Inc. v.
U.S. Forest Serv., 399 F.3d 1047, 1050 (9th Cir. 2005) (inter-
KOURTIS v. CAMERON 10583
nal quotation marks omitted). Because the Kourtises were not
a party to the Green litigation, they are free to relitigate the
copyright infringement issue unless they were in privity with
Green.4
a
[6] Privity “is a legal conclusion designating a person so
identified in interest with a party to former litigation that he
represents precisely the same right in respect to the subject
matter involved.” United States v. Schimmels, 127 F.3d 875,
881 (9th Cir. 1997) (internal quotation marks omitted).
Because the concept of privity extends the reach of a judicial
decision to nonparties and thereby deprives them of their own
day in court, due process considerations make adequacy of
representation a prerequisite to privity. Indeed, the Supreme
Court has repeatedly emphasized that “it would violate the
Due Process Clause . . . to bind litigants to a judgment ren-
dered in an earlier litigation to which they were not parties
and in which they were not adequately represented.” Richards
v. Jefferson County, 517 U.S. 793, 794 (1996); see also
Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S.
313, 329 (1971) (“Some litigants—those who never appeared
in a prior action—may not be collaterally estopped without
litigating the issue. They have never had a chance to present
their evidence and arguments on the claim. Due process pro-
hibits estopping them despite one or more existing adjudica-
tions of the identical issue which stand squarely against their
position.”).
[7] Privity was traditionally limited to several well-defined
4
We need not discuss the second element of the collateral estoppel
inquiry because all parties agree that the Green litigation, which con-
cluded with a grant of summary judgment in favor of Cameron, terminated
in a final judgment on the merits. See Jackson v. Hayakawa, 605 F.2d
1121, 1125 n.3 (9th Cir. 1979) (noting that summary judgment is a final
judgment on the merits for preclusion purposes).
10584 KOURTIS v. CAMERON
categories of relationships, including co-owners and co-
tenants of property, assignors and assignees, and indemnitors
and indemnitees. See Headwaters Inc., 399 F.3d at 1053.
Recent cases apply the privity concept in a much more flexi-
ble manner, however, and courts have found the existence of
privity in an array of disparate circumstances summarized
under the heading of “virtual representation.” See id.
[8] The case law applying the virtual representation doc-
trine has been appropriately characterized as “episodic” and
lacking any “clear pattern,” and it is therefore difficult to dis-
till a generally applicable framework from the relevant prece-
dent. 18A Charles Alan Wright, Arthur R. Miller & Edward
H. Cooper, Federal Practice and Procedure § 4457, at 513
(2d ed. 2002); see also Headwaters Inc., 399 F.3d at 1053 n.5
(asserting that the “virtual representation concept is amor-
phous, illustrates the harm that can be done when a catchy
phrase is used to describe a perfectly sensible result, and
cast[s] more shadows than light on the problem to be decided”
(internal quotation marks omitted; alteration in original)).
Nevertheless, those relationships that courts have deemed suf-
ficient to give rise to virtual representation do share certain
features: “a close relationship, substantial participation, and
tactical maneuvering all support a finding of virtual represen-
tation; identity of interests and adequate representation are
necessary to such a finding.” Irwin v. Mascott, 370 F.3d 924,
930 (9th Cir. 2004) (emphasis added).
In Irwin, for example, we concluded that a corporation was
the virtual representative of its senior corporate officer. Id. at
931. In so holding, we emphasized that the officer was inti-
mately involved in the earlier litigation and that there was “no
assertion that [the officer’s] interests diverged” from the cor-
poration’s. Id. at 930-31; see also Trevino v. Gates, 99 F.3d
911, 924 (9th Cir. 1996) (holding that a child who filed a
§ 1983 action against law enforcement officers premised upon
the shooting death of her father was collaterally estopped
from relitigating the punitive damages issue by her grand-
KOURTIS v. CAMERON 10585
mother’s earlier suit concerning the same events because the
grandmother had a “tremendous incentive” to recover puni-
tive damages).
In contrast, we held in Nordhorn v. Ladish Co., 9 F.3d
1402, 1405 (9th Cir. 1993), that two corporations, HITCO and
Ladish, were not in privity with each other where Ladish had
no participation in or control over the earlier suit against
HITCO and there was “no indication that HITCO had any
interest in Ladish’s affairs or well-being during or after the
lawsuit against HITCO.”
[9] Regardless of whether privity is asserted upon one of
the more traditional grounds or upon the basis of so-called
“virtual representation,” a conflict of interest between a non-
party and his purported representative forecloses the possibil-
ity of privity because a nonparty cannot be adequately
represented by a person with whom he is in conflict.5 See
Tahoe-Sierra Pres. Council, Inc., 322 F.3d at 1082 (“if there
is no conflict between the organization and its members, and
if the organization provides adequate representation on its
members’ behalf, individual members not named in a lawsuit
may be bound by the judgment won or lost by their organiza-
tion” (first emphasis added)). In Hansberry v. Lee, 311 U.S.
5
Cameron contends that adequacy of representation is not required to
establish preclusion on the basis of a traditional privity category, such as
assignor and assignee. This argument overlooks the weighty due process
considerations that make adequacy of representation the sine qua non of
any privity relationship. See Tahoe-Sierra Pres. Council, Inc. v. Tahoe
Reg’l Planning Agency, 322 F.3d 1064, 1082 (9th Cir. 2003) (noting that
one of the traditional relationships that may give rise to privity “is that of
an organization or unincorporated association filing suit on behalf of its
members,” while cautioning that, “[o]f course, the organization must ade-
quately represent the interests of its individual members if its representa-
tion is to satisfy the due process concerns articulated in Hansberry v.
Lee”); see also Richards, 517 U.S. at 798 (“there are clearly constitutional
limits on the ‘privity’ exception”); Headwaters Inc., 399 F.3d at 1054
(“adequate representation is a due process prerequisite to precluding a liti-
gant from his day in court if he was not a party to the earlier litigation”).
10586 KOURTIS v. CAMERON
32, 37 (1940), for example, a group of landowners sought to
enforce a racially restrictive covenant against African-
American property holders. The covenant was only operative
if approved by 95% of the neighborhood’s landowners, and
the defendants contested its validity on that ground. Id. at 38.
Relying upon a prior proceeding to which the African-
American property holders were not a party, the Illinois courts
held that the defendants’ challenge was precluded because the
litigants to the earlier case had stipulated that the requisite
number of landowners had indeed assented to the covenant.
Id. at 38-39.
The Supreme Court reversed and held that it was inconsis-
tent with due process to bind the African-American property
holders to that stipulation because none of the parties to the
previous case had adequately represented their interests. Id. at
44. The Court emphasized that the plaintiffs in the earlier liti-
gation were attempting to enforce the restrictive covenant,
whereas the defendants in the present case were seeking to
invalidate it. Id. at 45-46. On the basis of this conflict, the
Court concluded that the African-American property holders
had not been adequately represented by the prior plaintiffs.
See id. (“In seeking to enforce the agreement the plaintiffs in
[the earlier] suit were not representing the [African-American
property holders] whose substantial interest is in resisting per-
formance.”).
Here, the district court premised the existence of privity
upon the agency relationship that was created when the Kour-
tises hired Green to write the Minotaur screenplay. The court
concluded that “Green’s interests in the action are identical to
the Kourtises’ interests, and Green and the Kourtis plaintiffs
share tremendous incentive to achieve a decision in their
favor, namely, a determination that defendants infringed their
copyrights.” Dist. Ct. Order 9.
[10] While the district court is correct that both Green and
the Kourtises have an interest in establishing that Terminator
KOURTIS v. CAMERON 10587
II infringed upon The Minotaur, “parallel legal interests alone,
identical or otherwise, are not sufficient to establish privity.”
Headwaters Inc., 399 F.3d at 1054. Both “identity of interests
and adequate representation are necessary.” Irwin, 370 F.3d
at 930 (emphasis added).
[11] The one-time agency relationship between Green and
the Kourtises does not satisfy the adequacy-of-representation
requirement. Green was not acting as the Kourtises’ agent
when pursuing his claim against Cameron: the Kourtises did
not direct him to file suit and they did not stand to share in
the recovery if he prevailed. Cf. FTC v. Garvey, 383 F.3d 891,
898 (9th Cir. 2004) (holding that res judicata bars a claim
brought against an indemnitee if the same claim has already
been pursued against the indemnitor in its capacity as indem-
nitor). Moreover, Green’s litigating position was adverse to
the Kourtises because it was premised upon the allegation that
he—not the Kourtises—owned the Minotaur copyright. Thus,
like the African-American property holders in Hansberry and
the earlier litigants seeking to enforce the racially restrictive
covenant, the Kourtises and Green are in conflict concerning
a matter central to the issue on which preclusion is sought. In
light of this conflict, it cannot be said that the Kourtises were
adequately represented by Green during the earlier proceed-
ings. Privity therefore did not exist between them.
b
[12] The fact that the Kourtises were aware of the Green
litigation and failed to intervene does not affect our collateral
estoppel analysis. There is no duty of mandatory intervention
imposed upon nonparties, and the decision not to intervene
thus does not expose a nonparty to the earlier proceedings’
preclusive effects. See 18A Wright, Miller & Cooper, supra,
§ 4452, at 399 (“Rules on intervention such as [Fed. R. Civ.
P.] 24 have not been drawn in compulsory terms. Intervention
has been conceived as a device that permits a nonparty to
become a party when it wishes . . . .” (emphasis added)).
10588 KOURTIS v. CAMERON
Martin v. Wilks, 490 U.S. 755 (1989), illustrates the non-
compulsory nature of intervention. There, a group of white
firefighters brought suit challenging a city’s affirmative action
program, which had been implemented under a consent
decree that terminated litigation in which the Martin plaintiffs
had not participated. Id. at 758. Even though the white fire-
fighters were aware of the prior suit and chose not to inter-
vene, the Supreme Court held that they were not collaterally
estopped by the earlier proceedings. Id. at 763. The Court
explained that the
law does not impose upon any person absolutely
entitled to a hearing the burden of voluntary inter-
vention in a suit to which he is a stranger. . . . Unless
duly summoned to appear in a legal proceeding, a
person not a privy may rest assured that a judgment
recovered therein will not affect his legal rights.
Id. (internal quotation marks omitted; alteration in original).
The Court concluded that “[j]oinder as a party, rather than
knowledge of a lawsuit and an opportunity to intervene, is the
method by which potential parties are subjected to the juris-
diction of the court and bound by a judgment or decree.” Id.
at 765.6
[13] The onus therefore rested with Cameron to join the
Kourtises to the Green litigation. The Kourtises themselves
were under no obligation to intervene, and they are free to
pursue their copyright infringement claim in this suit because
they were neither parties to the Green case nor in privity with
a party.
6
Congress overrode the Martin decision in the specific context of
employment discrimination suits when it enacted the Civil Rights Act of
1991, which provides that parties adversely affected by the judgment in an
employment discrimination case may not institute a new action challeng-
ing that judgment if they had an opportunity to intervene in the earlier
case. See 42 U.S.C. § 2000e-2(n). Martin’s holding remains intact outside
of the employment discrimination setting.
KOURTIS v. CAMERON 10589
B
Cameron asserts that there exist several alternative grounds
for affirming the dismissal of the Kourtises’ copyright
infringement claim.
1
Cameron first argues that the Kourtises lack standing to
pursue an infringement claim because they do not allege own-
ership of The Minotaur’s copyright. This contention is belied
by the complaint, in which the Kourtises explicitly allege that
they own the copyright to The Minotaur. See Compl. ¶ 11 (“In
early 1987 F. and C. Kourtis developed original creative
material concept for a feature film entitled ‘The Minotaur’
and wrote a treatment (‘Kourtis Treatment’). They registered
it in Australia with Worldwide Register of Copyright, Regis-
tration No. 20568.”). The Kourtises’ allegations satisfy the
permissive requirements of notice pleading. See Fed. R. Civ.
P. 8(a).
2
[14] Cameron also contends that the Kourtises’ copyright
infringement claim is barred by the Copyright Act’s three-
year statute of limitations. See 17 U.S.C. § 507(b). “A cause
of action for copyright infringement accrues when one has
knowledge of a violation or is chargeable with such knowl-
edge.” Roley v. New World Pictures, Ltd., 19 F.3d 479, 481
(9th Cir. 1994). In a case of continuing infringement, how-
ever, “an action may be brought for all acts that accrued
within the three years preceding the filing of the suit.” Id.; see
also Kling v. Hallmark Cards, Inc., 225 F.3d 1030, 1038 (9th
Cir. 2000) (“the [copyright] statute of limitations is triggered
only by violations—i.e., actual infringements”).
[15] The Kourtises acknowledge in their complaint that
they learned of Cameron’s alleged infringement in 1991,
10590 KOURTIS v. CAMERON
when Terminator II was released. This initial act of infringe-
ment indeed falls outside the statute of limitations. Neverthe-
less, the complaint also alleges several acts of continuing
infringement, including the release of Terminator II on DVD
and the use of the Minotaur materials to develop Terminator
III. Because the complaint does not identify the date on which
the Kourtises discovered these acts of continuing infringe-
ment, it cannot be concluded that the Kourtises’ claim is time-
barred in its entirety. See Danjaq LLC v. Metro-Goldwyn-
Mayer, Inc., 263 F.3d 942, 954 (9th Cir. 2001) (recognizing
that the re-release of a movie on DVD could constitute a sepa-
rate act of copyright infringement for statute-of-limitations
purposes, even though the movie had originally been released
decades before the plaintiff filed suit). Cameron is free, of
course, to pursue the statute-of-limitations issue on summary
judgment. See Roley, 19 F.3d at 482 (affirming a grant of
summary judgment on statute-of-limitations grounds where
the plaintiff’s continuing infringement theory was premised
upon “naked allegations and speculation”).
3
Lastly, Cameron urges us to dismiss the Kourtises’ copy-
right infringement claim on the basis of laches, an equitable
defense that bars the claims of a plaintiff “who with full
knowledge of the facts, acquiesces in a transaction and sleeps
upon his rights.” Danjaq LLC, 263 F.3d at 950-51 (internal
quotation marks omitted). A defendant asserting laches must
establish both unreasonable delay by the plaintiff and preju-
dice to himself. Id. at 951.
The Kourtises’ complaint simply does not provide suffi-
cient factual allegations to conclude that they unreasonably
delayed in filing suit and that Cameron was prejudiced by this
delay. Indeed, “a claim of laches depends on a close evalua-
tion of all the particular facts in a case,” and it therefore “is
seldom susceptible of resolution by summary judgment.”
Kling, 225 F.3d at 1041 (internal quotation marks omitted). At
KOURTIS v. CAMERON 10591
the motion-to-dismiss phase, the obstacle to asserting a suc-
cessful laches defense is even greater because the defendant
must rely exclusively upon the factual allegations set forth in
the complaint. Cameron’s laches defense is therefore prema-
ture.
III
We next consider whether it was proper for the district
court to dismiss each of the Kourtises’ state law claims on
statute-of-limitations grounds.
A
[16] Under California law, claims for breach of an implied
or oral contract are governed by a two-year statute of limita-
tions. See Cal. Civ. Proc. Code § 339(1) (“[a]n action upon a
contract, obligation or liability not founded upon an instru-
ment of writing” must be filed “[w]ithin two years”). Such
claims accrue at the time of breach. See Menefee v. Ostawari,
278 Cal. Rptr. 805, 809 (Ct. App. 1991) (“a cause of action
for breach of contract ordinarily accrues at the time of breach
regardless of whether any substantial damage is apparent or
ascertainable”); In re Estate of Fincher, 174 Cal. Rptr. 18, 23
(Ct. App. 1981) (“The general rule is that a suit for breach of
an implied agreement accrues at the time of the breach.”).
[17] The Kourtises allege that they entered into oral and
implied contracts in which Cameron agreed to produce a proj-
ect based upon the Minotaur materials. The latest date upon
which their breach-of-contract claims could have accrued is
1991, when Cameron released Terminator II, which is more
than a decade before this suit was filed. The Kourtises’
attempt to extend the statute of limitations based upon a con-
tinuing violation theory akin to copyright’s continuing
infringement doctrine is unavailing because they do not cite—
and we are not aware of—any precedent that supports such a
result.
10592 KOURTIS v. CAMERON
[18] Because the Kourtises waited more than a decade after
the accrual of their breach-of-contract claims to file suit, such
claims are barred by the statute of limitations.
B
[19] The Kourtises’ breach-of-confidence claim is likewise
subject to a two-year limitations period. See Rokos v. Peck,
227 Cal. Rptr. 480, 489 (Ct. App. 1986) (“The statute of limi-
tations for either [a] cause of action for breach of implied con-
tracts or [a] cause of action for breach of confidence is
identical . . . .”). The Kourtises’ claim accrued when they first
suffered “appreciable and actual harm,” Davies v. Krasna,
535 P.2d 1161, 1169 (Cal. 1975), which again could be no
later than the date on which Terminator II was released in
1991. Their breach-of-confidence claim is therefore untimely.
IV
The district court erred when it held that the Kourtises are
collaterally estopped from pursuing their copyright infringe-
ment claim, and we therefore reverse the dismissal of that
claim. The district court correctly concluded, however, that
the Kourtises’ state law claims are barred by the statute of
limitations, and we affirm that portion of the court’s decision.
AFFIRMED in part, REVERSED in part, and
REMANDED for further proceedings consistent with this
opinion.7
7
Each party shall bear its own costs on appeal. See Fed. R. App. P.
39(a)(4).