747 F.2d 1396 (11th Cir. 1984), 82-8669, National Independent Theatre Exhibitors, Inc. v. Charter Financial Group, Inc.

Docket Nº:82-8669.
Citation:747 F.2d 1396
Party Name:NATIONAL INDEPENDENT THEATRE EXHIBITORS, INC., et al., Plaintiffs-Appellants, v. CHARTER FINANCIAL GROUP, INC., etc., et al., Defendants-Appellees.
Case Date:December 05, 1984
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit

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747 F.2d 1396 (11th Cir. 1984)




CHARTER FINANCIAL GROUP, INC., etc., et al., Defendants-Appellees.

No. 82-8669.

United States Court of Appeals, Eleventh Circuit

December 5, 1984

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[Copyrighted Material Omitted]

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James Thomas Patterson, Sr., pro se.

Lawrence L. Aiken, Riverdale, Ga., for Nat. Independent Theatre Exhibitors.

Sutherland, Asbill & Brennan, Alfred A. Lindseth, Thomas A. Varlan, Atlanta, Ga., for Charter.

Troutman, Sanders, Lockerman & Ashmore, Jeffrey R. Nickerson, June Ann Kirkland, Atlanta, Ga., for Columbia.

Appeal from the United States District Court for the Northern District of Georgia.

Before TJOFLAT and HATCHETT, Circuit Judges, and GARZA [*], Senior Circuit Judge.

TJOFLAT, Circuit Judge:

This suit arises out of a dispute over the right to distribute a motion picture, "The Buddy Holly Story," for exhibition in theatres across the United States. James Thomas Patterson, Sr. and National Independent Theatre Exhibitors, Inc. (NITE) claim that they had a contract right, given them by Charter Financial Group, Inc. (Charter), one of the film's co-executive producers, to distribute the film and that Charter and Columbia Picture Industries, Inc. (Columbia) wrongfully deprived them of that right when Charter made Columbia the exclusive distributor of the film.

Patterson and NITE sued Charter and Columbia in the district court in three counts, each seeking money damages on a discrete theory of liability. First, plaintiffs, invoking section 4 of the Clayton Act, 15 U.S.C. Sec. 15 (1982), 1 claimed that the defendants' conduct violated sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1 and 2 (1982), and that they were entitled to treble damages. Second, plaintiffs claimed that Charter's breach of its distribution contract with them rendered Charter liable for the revenues they would have obtained had they distributed the film. Third, plaintiffs claimed that Columbia had tortiously interfered with their contract with Charter and thus was also liable for the same lost revenues. 2 The defendants denied the alleged wrongdoing. Charter also counterclaimed, alleging that the plaintiffs fraudulently induced it to enter into any distribution contract it may have made with them and that it had suffered consequential damages as a result.

The case was tried to a jury. At the close of the plaintiffs' case, the court directed a verdict for Columbia and dismissed it from the case. At the close of all the evidence, the court directed a verdict for Charter on plaintiffs' antitrust claims. It submitted plaintiffs' breach of contract claim to the jury, and the jury found for Charter.

Patterson and NITE appeal. Patterson contends that the district court erred in taking his antitrust 3 and tort claims from the jury and that the court committed reversible error in charging the jury on his

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breach of contract claim against Charter. NITE does not challenge the district court's direction of verdicts; it takes issue only with the court's handling of its breach of contract claim against Charter. We find no reversible error in this case and accordingly affirm.


Charter is an investment brokerage company operating out of Houston, Texas. It serves as an intermediary in the financing of business ventures. Its clients include entrepreneurs who are in need of venture capital and individual investors who possess such capital. Charter's involvement in the distribution of "The Buddy Holly Story" was its first experience in a motion picture venture.

In 1976, Ed Cohen, Fred Bauer and Steve Rush (the "Owners") acquired the movie rights to the life of Buddy Holly, a famous rock star musician of the 1950's. They lacked the resources to produce and distribute a movie and entered into a formal contract with Charter to fund the production and distribution of "The Buddy Holly Story." The contract provided that Charter would solicit $2 million in investment capital and form a limited partnership consisting of the Owners, who would contribute their film rights, and individual investors. The limited partnership would, in turn, contract with the Owners and Charter, as co-executive producers, to produce the film. In addition to being a co-executive producer, Charter would distribute the film, alone or through a major film distributor, to the exhibiting theatres across the country.

In the summer of 1976, after Charter contracted with the Owners, its vice president, Fred Kuehnert, contacted Patterson, who was president of NITE, about the possibility of NITE's distributing "The Buddy Holly Story." NITE was an association of independently owned theatre operators who, collectively, possessed some 5,000 theatre screens. NITE's board of directors had recently decided to distribute high quality films in competition with the major film distributors, such as Columbia, and was looking for a first run film to kick off its distribution program. Patterson convinced Kuehnert that NITE could do as good a job as the major distributors in obtaining theatre exhibitors to show the movie. He also impressed Kuehnert with his representation that, in advance of the film's distribution, NITE would obtain binding commitments from the exhibitors for minimum film rentals which Charter, in turn, could use to entice investors 4 to underwrite the film's production costs.

After a series of negotiations, Patterson and Kuehnert, on April 11, 1977 in Atlanta, Georgia, orally agreed on the following terms to be incorporated into a written exclusive distribution agreement between NITE and Charter. 5 NITE would get 750 of its member theatres to sign exhibition contracts with Charter obligating the theatre to rent "The Buddy Holly Story" for a specified period at a guaranteed minimum rent. Patterson told Kuehnert that it would take NITE about two months to solicit these exhibitors, so they agreed that NITE would have 120 days thereafter to place the exhibitors under contract. Charter, in return, would pay NITE $50,000 and would underwrite certain of NITE's solicitation expenditures. After the movie was

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produced and ready for distribution, Charter would deliver it to the NITE members who had contracted to exhibit it, collect the film rentals, and pay NITE twenty percent of these rentals.

Charter's obligation to distribute "The Buddy Holly Story" through NITE was contingent upon its acquisition of investment capital sufficient to produce the movie. Once Patterson and Kuehnert came to the understanding we have described, Charter set about the task of raising that capital. It soon found a group of investors in Boston, Massachusetts (the "Boston Group") willing to provide the necessary capital provided they could borrow it. The Boston Group contacted First National Bank of Boston, which had considerable experience in financing film production costs, and were advised that the...

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