Bozzio v. EMI Group

The incapacity of the promisee to a contract is not an absolute bar to a lawsuit by a third-party beneficiary.

Dale Bozzio, a front woman of the former band Missing Persons, brought a putative class action lawsuit against various music companies alleging breach of a recording contract because certain sales were treated as record sales rather than revenue from licensing, which resulted in a lower royalty rate than the contract stated. The district court dismissed Bozzio’s claim concluding that Missing Persons, Inc. was a suspended corporation and Bozzio was prevented from bringing the suit. On appeal, Bozzio challenged the district court’s ruling that Missing Persons Inc.’s status as a suspended corporation precluded Bozzio’s third-party beneficiary suit. Relying on Performance Plastering v. Richmond American Homes, the Ninth Circuit stated that “the incapacity of the promisee to a contract [is not] an absolute bar to a lawsuit by a third-party beneficiary.” The panel therefore found that Bozzio did have the ability to bring suit as a third-party beneficiary while not undermining legislative intent. Further, the panel ruled that whether Bozzio’s ability to sue was forfeited was not suited for resolution at the dismissal stage and is a fact-bound inquiry. The panel found that there was a factual issue within the contract as to forfeiting a party’s ability to sue. REVERSED and REMANDED.