Cagle v. Hybner, No. M2006-02073-COA-R3-CV (Tenn. App. 7/3/2008)
| Decision Date | 03 July 2008 |
| Docket Number | No. M2006-02073-COA-R3-CV.,M2006-02073-COA-R3-CV. |
| Parties | CHRIS CAGLE v. MARK J. HYBNER, ET AL. |
| Court | Tennessee Court of Appeals |
Appeal from the Chancery Court for Davidson County; No. 04-1248-II; Carol L. McCoy, Chancellor.
Judgment of the Chancery Court Affirmed in Part; Reversed in Part.
Jay S. Bowen, Amy E. Neff, and Sarah J. Glasgow, Nashville, Tennessee, for the appellant, Chris Cagle.
Donald S. Engel and Jeffrey Logan, Pro Hac Vice, Atherton, California, for the appellant, Chris Cagle.
Paige Waldrop Mills, Nashville, Tennessee, for the appellees, Mark J. Hybner, Mark Hybner Management, Inc., and Mark Hybner Publishing, Inc.
OPINION
The plaintiff, a songwriter and recording artist, filed this action against his manager and publisher seeking a declaration that the Exclusive Management Agreement and the Exclusive Songwriter Agreement were invalid and unenforceable due to various alleged breaches of fiduciary duty and breaches of contract. The defendants filed Counterclaims seeking a declaration that the Management Agreement and the Songwriter Agreement were valid, and that they sought to recover damages and attorney's fees. The music publisher additionally sought specific performance of the Songwriter Agreement and an injunction to prevent the songwriter from composing any songs for others until the plaintiff fulfilled his obligation to the publisher. The Chancellor summarily dismissed the plaintiff's Complaint. The Chancellor also summarily ruled that the Management Agreement and the Songwriter Agreement were valid and enforceable, that the plaintiff was in material breach of both agreements. As for the Songwriter Agreement, the Chancellor found that the plaintiff was obligated to compose and deliver to the publisher an additional 76 songs of marketable commercial quality, for which the publisher was granted equitable relief in the form of specific performance as well as injunctive relief, whereby the plaintiff was enjoined from composing any songs for others until the songwriter fulfilled his obligation to the publisher. The defendants were also awarded $737,201 in damages, which included an award of attorneys fees of $171,704. The plaintiff appealed presenting numerous issues. We affirm the Chancellor's decision to dismiss the plaintiff's Complaint. We also affirm the Chancellor's determination that the Management Agreement and the Songwriter Agreement were valid and enforceable and that the plaintiff was in material breach of both agreements for which the defendants are entitled to recover damages. We, however, have determined the Chancellor erred by granting the publishing company extraordinary equitable relief in the form of specific performance and injunctive relief under the Songwriter Agreement. Because of our decision concerning specific performance and injunctive relief, each of which are factors to consider when determining the amount of attorney's fees the defendants may be entitled to recover, we find it necessary to vacate the award of attorney's fees in the amount of $171,704 and remand the issue, along with the issue of damages and other relief, if any, to which the defendants may be entitled.
In 1994, Christopher (Chris) Cagle moved from Texas to Nashville to pursue a career as a songwriter and recording artist. Approximately a year after moving to Nashville, Cagle entered into a management and publishing agreement with Caliber Music1; however, his dreams of quickly becoming a country music star were soon met with the sobering realities of the seemingly impenetrable music industry. Over the next two years, Cagle became disenchanted by the decidedly disinterested reception he was receiving from the Nashville music industry and with an overall lack of success while under contract with Caliber Music.
In the summer of 1998, Cagle met music executive Mark Hybner through a mutual friend. Cagle was immediately impressed with Hybner, and Hybner soon came to believe that Cagle may have the makings of a possible "superstar" and expressed a willingness to become Cagle's manager if and when Cagle was contractually available. Hoping to find greener pastures with the assistance of Hybner, Cagle terminated his contract with Caliber Music in the fall of 1998 and pursued a relationship with Hybner.2 Although the two did not enter into a formal management agreement until November of 1999, it is undisputed that Hybner took Cagle under his wing in the fall of 1998 and began serving as Cagle's unofficial "personal manager." By December of 1998, Hybner began providing money to Cagle to "keep his lights on and pay his rent" so Cagle could continue writing songs and pursue a career in music. In April of 1999, Hybner arranged for Cagle to record several "demos" of songs he had written in an attempt to secure contracts with record labels and publishing companies.
Thereafter, on November 10, 1999, Cagle entered into an Exclusive Management Agreement (hereinafter "Management Agreement") with Mark Hybner Artist Management, Inc., (hereinafter "Hybner Management"). It is undisputed that Cagle had the benefit of the independent advice and counsel from entertainment attorney Ken Krause to represent him throughout the negotiations of the Management Agreement and that Krause negotiated on Cagle's behalf certain modifications in the Management Agreement prior to Cagle entering into the agreement.
The Management Agreement provided, inter alia, that Hybner Management would provide the personal services of Mark Hybner, who would serve as Cagle's exclusive manager, act as his advisor, supervise his professional engagements, and advise and counsel Cagle on matters related to his career during the five year term of the agreement.3 In consideration for its management services, Hybner Management would be paid twenty percent (20%) of Cagle's gross earnings. As with most management agreements, Hybner reserved the right to engage in business activities and transactions that did not involve Cagle. The clause reads, "It is expressly understood and agreed by [Cagle] that Manager may be engaged in other business activities which may or may not conflict with [Cagle's] career." Conversely, the Management Agreement prohibited Cagle from signing any agreement relating to recording, production, merchandising, songwriting or music publishing without the prior consent of Hybner Management.
Three weeks after Cagle entered into the Management Agreement with Mark Hybner Artist Management, Inc., Cagle entered into an Exclusive Songwriter Agreement with Mark Hybner Publishing, Inc. Unlike the Management Agreement, Cagle was not represented by and did not seek the advice of an attorney prior to signing the Songwriter Agreement with Hybner.
The Exclusive Songwriter Agreement (hereinafter "Songwriter Agreement") required that Cagle render his "exclusive services" as author, composer, arranger, and adapter of musical compositions to Hybner Publishing for the term of the contract.4 As is customary in such agreements, Cagle assigned unto Hybner Publishing all musical compositions and related works written, composed or arranged by Cagle during the term together with all copyrights therein, including renewals and extensions, and Hybner Publishing agreed to pay Cagle fifty percent of any and all gross receipts derived from the use of Cagle's compositions and fifty percent of any and all gross receipts derived from mechanical, synchronization, performance and all other uses of the compositions.
The Songwriter Agreement contained a minimum writing requirement along with an "Advances" provision. Pursuant to the minimum writing requirement, Cagle was to author eighteen songs5 a year for each year of the contract, and Cagle was to deliver no less than the minimum writing requirement not later than thirty days prior to the expiration of each year of the contract. In the "Advances" paragraph of the agreement, Hybner Publishing agreed to pay Cagle an advance of $2,500 per month for the first three years of the contract, and $3,000 per month for each of the last two years. The agreement expressly stated that the advances were deemed "nonreturnable advances" and were "recoupable" from any royalties otherwise payable to Cagle.
On July 1, 2000, Cagle entered into a recording contract with a major record label, Virgin Records.6 Linda Edell Howard, an experienced entertainment attorney, represented Cagle in the negotiations with Virgin Records. Mark Hybner was not directly involved in the negotiations of Cagle's recording contract; however, Ms. Howard called Hybner to obtain his approval of the final draft of the contract before Cagle entered into the contract with Virgin Records.
Not long after Cagle had entered into the recording contract with Virgin Records, Cagle's relationship with Hybner, and others, began to deteriorate. The first cold breeze blew when it was discovered that the "controlled comps" provision in his recording contract with Virgin Records conflicted with a provision in the Songwriter Agreement with Hybner Publishing. In the Songwriter Agreement, Cagle had agreed to a composition rate at "the statutory rate" but in the recording contract with Virgin Records, Cagle had agreed to a reduced rate of seventy-five percent of the statutory rate, known as the "controlled comps" provision. Virgin Records insisted that Cagle and Hybner abide by the "controlled comps" provision in the recording contract between Cagle and Virgin Records.
When the conflict was discovered by Virgin Records, it notified Cagle and Hybner Publishing and informally requested that Hybner Publishing agree to license the songs to Virgin Records at the reduced rate. When Hybner declined Virgin Records' informal request, Virgin Records sent a letter to Hybner and Cagle stating that...
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