Friday, March 10, 2006
Ninth Circuit Affirms in Part, Reverses in Part, Summary Judgment in LaHaye Lawsuit Against Movie Company for Breaches of Contract, Implied Covenant of Good Faith, Fair Dealing
The U. S. Ninth Circuit has reversed in part and affirmed in part the district court in LaHaye v. Goodneuz Group d/b/a Namesake Entertainment, in a lawsuit over whether Goodneuz should have released the film version of LaHaye's book to theaters before its video release, among other claims. The district court had granted summary judgment for Goodneuz on both a breach of contract claim and a breach of implied covenant of good faith and fair dealing claim.
With regard to the contract claim, the majority stated, "We reverse the district court's grant of summary judgment on LaHaye's claim that Goodneuz breached its obligations under ¶ 18 of the parties' contract when it refused to enter into negotiations for a long-form agreement. We view the facts in the light most favorable to the party opposing the motion for summary judgment, and we find a genuine issue of material fact as to whether Goodneuz breached the agreement....Here... the nature and extent of the obligation imposed by ¶ 18 are ambiguous. Neither the language of the contract, nor the circumstances under which the parties contracted, illuminates the conditions under which a long-form agreement would be "needed.""
The majority found that "the circumstances surrounding the making of the contract raise a material question as to whether the video-first distribution strategy breached the implied covenant. LaHaye presents fact that, taken in the light most favorable to him, suggest that in the event the option was exercised and a film was produced, the parties intended and expected the contract to require distribution initially in theaters. Moreover, making all inferences in favor of LaHaye, there is a material question of fact as to whether a theater-first release of a film is so integral to film distribution that is was understandable not to include an express contractual term requiring a theater-first release, and whether the producers could have in good faith chosen to distribute the film initially on video....We affirm the district court's grant of summary judgment on LaHaye's remaining claims for declaratory relief. Because the contract contemplates the possibility that the final budget might not exceed $10 million, there is no question that the contract did not require a minimum budget of some $30 to $40 million. Because the contract contemplates the possibility that the producers could exercise the option as late as April 14, 2000, there is no triable issue as to whether the producers were required to release the film by January 1, 2000."
The case is Tim LaHaye v. Goodneuz Group LLC, d/b/a Namesake Entertainment; Cloud Ten Pictures, Inc., 04-55839 (unpublished). It is available through both LEXIS and WESTLAW.