ALK CORPORATION v. Columbia Pictures Industries, Inc.

• Decision Date: 07 April 1971
• Docket Number: No. 71-1015.,71-1015.
• Citation: 440 F.2d 761
• Parties: A. L. K. CORPORATION v. COLUMBIA PICTURES INDUSTRIES, INC., Appellant.
• Court: U.S. Court of Appeals — Third Circuit

440 F.2d 761 (1971)

A. L. K. CORPORATION v. COLUMBIA PICTURES INDUSTRIES, INC., Appellant.

No. 71-1015.

United States Court of Appeals, Third Circuit.

Argued February 17, 1971.

Decided April 7, 1971.

Bancroft D. Haviland, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa. (Michael R. Gardner, Philadelphia, Pa., on the brief), for appellant.

Henry W. Sawyer, III, Drinker, Biddle & Reath, Philadelphia, Pa. (James Eiseman, Jr., Melvin C. Breaux, Philadelphia, Pa., on the brief), for appellee.

Before FREEDMAN,^* SEITZ and ROSENN, Circuit Judges.

OPINION OF THE COURT

SEITZ, Circuit Judge.

This is an appeal from an order of the district court, 320 F.Supp. 816, granting plaintiff's motion for a preliminary injunction against defendant's licensing or contracting to license the showing of a particular motion picture at any theatre within the Philadelphia area other than that owned by plaintiff.

In April of 1970, defendant (Columbia), a motion picture distributor, granted to plaintiff (The 1812), the owner and operator of The 1812 Theatre, a license for the exclusive first-run Philadelphia exhibition of a motion picture entitled "Husbands." Shortly after the licensing agreement was executed, however, Columbia notified The 1812 that it would not be able to deliver "Husbands" on or about the proposed delivery date of July 8, 1970¹ because of difficulties between Columbia and John Cassavetes, the producer of the motion picture, concerning the final cutting of the film. After a delay of several more months, Columbia finally informed The 1812 that it was invoking a clause in the agreement which purportedly terminated the license whenever Columbia, for reasons beyond its direct control, failed to obtain timely delivery from the producer. Columbia therefore told The 1812 that it intended to solicit new bids from all Greater Philadelphia first-run theatres for the exclusive license to exhibit "Husbands." Denying that the agreement had terminated, The 1812 then brought the present diversity action, seeking to enjoin Columbia from resubmitting "Husbands" for bids, to compel specific performance of its licensing agreement with Columbia, and to recover damages.

After a hearing on plaintiff's motion for a preliminary injunction, the district court interpreted the licensing agreement as not being subject to termination by Columbia merely because of the producer's failure to make timely delivery. Ruling that every motion picture is a "unique" production and that The 1812's inability to obtain "Husbands" might cause an intangible loss of good will, which it described as "theatre momentum," the court concluded that The 1812 would not have an adequate remedy at law for breach of contract since proof of damages would be difficult and speculative, if not impossible. The court thus found a probability that plaintiff would ultimately be successful on the merits and preliminarily enjoined Columbia from licensing the movie to any exhibitor in Philadelphia except The 1812. Unless the status quo were preserved, the court reasoned, plaintiff's rights under its license might be lost forever. If the preliminary injunction were ultimately determined to have been improvidently granted, on the other hand, Columbia would only sustain pecuniary damages, which could be prevented by requiring The 1812 to post a substantial bond.²

As a prerequisite to the issuance of a preliminary injunction the moving party must generally show: (1) a reasonable probability of eventual success in the litigation, and (2) that it will be irreparably injured pendente lite if relief is not granted to prevent a change in the status quo. Ikirt v. Lee National Corp., 358 F.2d 726, 727 (3d Cir. 1966). In applying these criteria, a district court must have considerable discretion because of the infinite variety of situations which may confront it. Nevertheless, its discretion is not unlimited and must be guided by the traditional principles of equity. Without reaching the substantial question of contractual interpretation decided by the district court, we find that plaintiff has failed to satisfy the second of the above prerequisites for interlocutory injunctive relief.

Admittedly, the denial of a preliminary injunction in this case would permit Columbia to resolicit bids on "Husbands," with the resulting possibility that plaintiff's asserted rights to the film will be lost. This injury cannot be considered "irreparable," however, unless plaintiff demonstrates that its legal remedies are either inadequate or impracticable. Generally speaking a breach of contract results in irreparable injury warranting equitable relief in two types of cases:

"1. Where the subject-matter of the contract is of such a special nature, or of such a peculiar value, that the damages, when ascertained according to legal rules, would not be a just and reasonable substitute for or representative of that subject-matter in the hands of the party who is entitled to its benefit; or in other words, where the damages are inadequate;

2. Where, from some special and practical features or incidents of the contract inhering either in its subject-matter, in its terms, or in the relations of the parties, it is impossible to arrive at a legal measure of damages at all, or at least with any sufficient degree of certainty, so that no real compensation can be obtained by means of an action at law; or in other words, where damages are impracticable."

4 Pomeroy, Treatise on Equity Jurisprudence § 1401, at 1033-34 (5th Ed. 1941) (emphasis in original); see Philadelphia Ball Club v. Lajoie, 202 Pa. 210, 51 A. 973, 974 (1902).

Against this legal background, plaintiff asserts that its injury from the denial of a preliminary injunction...