Clancy v. King

• Decision Date: 26 August 2008
• Docket Number: No. 112 Sept. Term, 2007.,112 Sept. Term, 2007.
• Citation: 405 Md. 541,954 A.2d 1092
• Parties: Thomas L. CLANCY, Jr. v. Wanda T. KING.
• Court: Court of Special Appeals of Maryland

954 A.2d 1092

405 Md. 541

Thomas L. CLANCY, Jr. v. Wanda T. KING.

No. 112 Sept. Term, 2007.

Court of Appeals of Maryland.

August 26, 2008.

Rachel T. McGuckian (J. Stephen McAuliffe, III of Miles & Stockbridge, P.C., Rockville, MD; Lowell R. Bowen of Miles & Stockbridge, P.C., Towson, MD), on brief, for Petitioner.

Jerrold A. Thrope (Sheila K. Sachs and Valerie L. Albrecht of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, L.L.C., Baltimore, MD), on brief, for Respondent.

Argued Before BELL, C.J., RAKER,^* HARRELL, BATTAGLIA, GREENE, MURPHY and DALE R. CATHELL (Retired, specially assigned), JJ.

HARRELL, Judge.

On 26 February 1992, Thomas L. Clancy, Jr, perhaps best known as the author of many popular "techno-thriller" novels, and Wanda King,¹ his wife at the time, entered into an agreement (the "JRLP Partnership Agreement"), under Maryland law, forming the Jack Ryan Limited Partnership (JRLP). The purpose, as later amended, of JRLP is to "engage in activities relating to the writing, publishing and sale of books or in any other lawful activity. . . ." Clancy and King each own a 1% general partnership interest and 49% limited partnership interest in JRLP. Section 5.5 of the 33 page JRLP Partnership Agreement states in pertinent part:

A The General Partners or their Affiliated Persons may act as general or managing partners for other partnerships engaged in businesses similar to that conducted by the Partnership. Nothing herein shall limit the General Partners or their Affiliated Persons from engaging in any such business activities, or any other activities which may be competitive with the Partnership or the [JRLP-owned] Property, and the General Partners or their Affiliated Persons shall not incur any obligation, fiduciary or otherwise, to disclose or offer any interest in such activities to any party hereto and shall not be deemed to have a conflict of interest because of such activities.. . . .

E. The General Partners shall be under a fiduciary duty to conduct the affairs of the Partnership in the best interests of the Partnership, including the safekeeping and use of all Partnership funds and assets and the use there-of for the benefit of the Partnership. The General Partners shall at all times act in good faith and exercise due diligence in all activities relating to the conduct of the business of the Partnership.

Section 5.7 of the JRLP Partnership Agreement provides that:

Neither the Partnership nor any Partner shall have any rights or obligations, by virtue of this Agreement, in or to any independent ventures of any nature or description, or the income or profits derived therefrom, in which a Partner may engage, including, without limitation, the ownership, operation, management, syndication and development of other businesses, even if in competition with the Partnership's trade or business.

JRLP, in furtherance of its purpose, contracted with S & R Literary, Inc., in a 23 March 1993 letter agreement, forming a joint venture known as "Tom Clancy's Op-Center" (Op-Center).² S & R Literary is controlled by its President, Dr. Steve R. Pieczenik. The original purpose of the Joint Venture Agreement was to develop a proposal for a television series.³ Proceeds from the efforts undertaken pursuant to the Op-Center joint venture were to be split evenly between JRLP and S & R Literary. The Op-Center Joint Venture Agreement pertinently states:

2. All decisions with respect to the development, use and exploitation of the proposal shall be made by mutual agreement between Steve R. Pieczenik and Tom Clancy; provided, however, that if, after discussion, no agreement is reached, the decision of Tom Clancy should prevail.

The signature page of the Joint Venture Agreement appears as follows:

If the foregoing is in accordance with your understanding, please indicate your agreement by signing and returning copies hereof to us.

                  Very truly yours
                  JACK RYAN LIMITED PARTNERSHIP
                  By [Mr. Clancy]
                

AGREED TO AND ACCEPTED:

S. & R. LITERARY, INC. By [Dr. Pieczenik]

AGREED TO (insofar as I am concerned):

[Mr. Clancy]

[Dr. Pieczenik]

To develop the paperback book series, Pieczenik assembled a team including Martin Greenberg, a book "packager,"⁴ and Jeff Rovin, an author-for-hire. Rovin was selected as the actual author of the series because, it was thought, he would be able to affect a "Clancyesque" style of writing. According to the testimony, Clancy had very little to do with the development of the series. Although he "glanced at a few" of the books, Clancy did not read, cover-to-cover or in any meaningful part, any of the books in the series. Apparently his chief contribution to the effort was the aura lent to the enterprise by the association of his name and reputation.

The Op-Center paperback books proved to be successful. Every book appeared on the New York Times Paperback Bestseller list. As of July 2003, the Op-Center book series generated over $28 million in domestic and foreign profits, after deducting writers' fees, commissions, and other expenses.

In 1996, in the midst of the Op-Center series of books, Clancy and King, as husband and wife, separated. Their divorce was finalized by the Circuit Court for Calvert County on 6 January 1999. Leading up to the divorce, Clancy and King entered into a Marital Property Agreement.⁵ Although the Marital Property Agreement did not alter the respective ownership interests of Clancy and King in JRLP, it designated Clancy as Managing Partner of JRLP.⁶ The Marital Property Agreement also contained a provision by which a party breaching the agreement would have to pay the non-breaching party's resultant costs.⁷

After a total of 10 books were published in the Op-Center series, and Books 11 and 12 slated for publication, Clancy set the stage for the possible removal of his name from the Op-Center series. JRLP and S & R Literary agreed, in a jointly signed letter dated 23 October 2001, that Clancy's name would be used in connection with Books 13 and 14 in the series. Clancy signed on behalf of JRLP; Pieczenik on behalf of S & R Literary. The letter agreement provided further that, after the publication of Book 14, JRLP could withdraw permission to use Clancy's name in connection with future books in the series.⁸

King filed a Complaint in the Circuit Court for Calvert County on 3 July 2003 alleging that Clancy breached his fiduciary duty to her and JRLP by, inter alia, stating⁹ that he intended to prevent the use of his name in connection with later books in the Op-Center series. She sought injunctive relief to prohibit Clancy, as Managing Partner of JRLP, from taking action detrimental to the Op-Center series, an order placing her in the role of Managing Partner of JRLP, and recovery of attorneys' fees and expenses.

It was not until 19 January 2004 that Clancy "pulled the trigger" on his announced intent to withdraw his name prospectively from the Op-Center series. Through counsel in a 19 January 2004 letter, he expressed his refusal to permit the Op-Center joint venture to use his name in connection with the series beyond Book 14. Specifically, the letter stated:

Although [Clancy], individually, permitted the joint venture to use the name "Tom Clancy" in the series title in connection with op-Center paperback books 1 through 14, he has withdrawn permission to the joint venture for further and future use of his name in the titles to the Op-Center paperback book series beyond book 14. Please accept this letter as confirmation of the fact that [Clancy] will not permit the joint venture to use his name in the title to the Op-Center paperback book series beyond book 14.

On 20 January 2004, Clancy filed in the case initiated by King a Counterclaim for Declaratory Relief. Clancy sought a declaration holding:

(1) That beyond rights granted by [him] to the Joint Venture to use the "Tom Clancy" name in the publication of Books 1 through 14 of the Op-Center paperback book series, the Joint Venture does not possess the right to use the name "Tom Clancy" in the Op-Center series title;

(2) That the Joint Venture does not have the right to use the name "Tom Clancy" in the series title for hardback book publications;

(3) That all decisions with respect to the development, use and exploitation of the Op Center concept are at the unfettered discretion of [Clancy], individually;

(4) That [Clancy] may withhold or withdraw any license to use his name in Joint Venture business endeavors for any reason, including for purely personal competitive reasons;

(5) That JRLP does not possess the right to use the name "Tom Clancy";

(6) That Wanda King does not possess the right to use the name "Tom Clancy"; [and]

(7) That [Clancy] does not owe a duty, as managing partner or otherwise, to JRLP such as would require him to permit the use of his name in JRLP's business ventures, including through its participation in the Joint Venture.

Clancy later filed a motion for summary judgment.¹⁰ King responded with a motion for partial summary judgment.¹¹ In denying Clancy's motion and granting King's, the trial court held that Clancy does not "individually own or control the mark `Tom Clancy's Op-Center'" and that Clancy's "partnership and/or contractual obligations to Ms. King preclude him from stopping the future use of the mark `Tom Clancy's Op-Center.'" The trial court ordered that the case proceed to trial on the issues of "the extent of equitable relief" to be granted to King and King's "request to recover her legal fees."

In consideration of arguments made on the first day of trial, the trial court vacated its summary judgment ruling in King's favor to the extent that it held that Clancy breached his fiduciary duty to JRLP and King.¹² That issue also proceeded to trial.

The Circuit Court bifurcated the trial. The object of the first portion of the trial was to determine whether Clancy breached his fiduciary duty to JRLP and King. The second part of the trial was to determine,...