Elite Entertainment v. Khela Bros. Entertainment

• Decision Date: 19 October 2005
• Docket Number: No. 1:04CV764.,1:04CV764.
• Citation: 396 F.Supp.2d 680
• Court: U.S. District Court — Eastern District of Virginia
• Parties: ELITE ENTERTAINMENT, INC. et al., Plaintiffs, v. KHELA BROTHERS ENTERTAINMENT INC, et al. Defendants.

396 F.Supp.2d 680

ELITE ENTERTAINMENT, INC. et al., Plaintiffs, v. KHELA BROTHERS ENTERTAINMENT INC, et al. Defendants.

No. 1:04CV764.

United States District Court, E.D. Virginia, Alexandria Division.

October 19, 2005.

COPYRIGHT MATERIAL OMITTED

Rajesh Bhandari, Sharma & Bhandari, Annandale, VA, for Plaintiffs.

Robert Powel Trout, Trout Cacheris PLLC, Washington, DC.

Lowry Jock Miller, Cyron & Miller LLP, Alexandria, VA, for Defendants.

Jagroop Singh Khela, Selma, CA, pro se.

MEMORANDUM OPINION

ELLIS, District Judge.

This breach of contract diversity action arises out of a dispute between Elite Entertainment ("Elite") and Khela Brothers Entertainment ("Khela Brothers") regarding the promotion of two concert tours in the United Kingdom in 2004. These concerts, commonly known as "Bollywood" performances, are popular with the expatriate Indian populations in Europe and the United States, as they feature well-known entertainers from India and neighboring countries. Specifically, the parties disagree on the terms of the contracts they reached to promote (i) an April 2004 concert tour in the United Kingdom featuring Hrithik Roshan and Aishwarya Rai; and (ii) a July 2004 concert tour, also in the United Kingdom, but featuring headliner Sharuk Khan, a.k.a. "SRK." Roshan, Rai, and SRK are among the most popular Bollywood entertainers in the world. Although both parties agree they entered into contracts to promote the tours in question, they differ sharply on the terms of these contracts, and each alleges the other party breached the contracts. Elite has sued Khela Brothers for breach of the contracts it claims were agreed to, and Khela Brothers has counterclaimed for breach of the contracts it contends were reached. Accordingly, the issues are (i) whether the parties entered into contracts for the two tours in question; and if so, (ii) what the terms of the contracts were; (iii) whether any contract was breached; and (iv) what damages, if any, resulted from the breaches.

Plaintiff Elite is a Virginia corporation with its principal place of business in Fairfax, Virginia. Defendant Khela Brothers is a California corporation with its principal place of business in Fresno, California. Individual defendants Jagroop and Daljeet Khela are both citizens of California. As the parties agree, subject matter jurisdiction is proper under 28 U.S.C. § 1332 because there is complete diversity of citizenship between the parties, and because the amount in controversy far exceeds the $75,000 jurisdictional minimum. The parties also agree that venue is proper pursuant to 28 U.S.C. § 1391(a).

II. FINDINGS OF FACT¹

1. In 1993, Vijay Taneja ("Taneja") formed Elite, a Virginia corporation with its principal place of business in Fairfax, Virginia. Through Elite, Taneja has promoted and produced 19 Bollywood tours, or approximately 200 shows. In the Bollywood concert promotion business, there is typically an international promoter and a local promoter. Since 1997, Taneja, through Elite, has served as the international promoter on 13 Bollywood tours. Thus, Taneja is an experienced international promoter of Bollywood shows.

2. The division of duties and responsibilities between international and local promoters in the Bollywood concert business is a well established custom and practice. The responsibilities of an international promoter typically include (i) recruiting and signing the performers; (ii) organizing and paying for all international promotion of the tour; (iii) hiring and paying the tour's show director and choreographer and their staffs; (iv) paying the performers the negotiated appearance fee; and (v) scheduling and coordinating the concert dates for the tour. Typically, once the performers have been signed, the international promoter contracts with a local promoter to sell the local promotion rights for individual shows for a flat fee. On some occasions, however, the international promoter may sell these rights before the contracts between the international promoter and the performers have been finalized.

3. Local promoters are responsible for arranging and financing all remaining logistics of the show, including, inter alia, (i) arranging local marketing; (ii) setting ticket prices; (iii) reserving and paying for the performance venue; and (iv) paying performers a stipend for incidental expenses incurred while on tour, such as food and lodging. Local promoters typically assume the risk that the show will succeed in that locality. For their efforts, they are entitled to the net proceeds generated by the show in that locality after the international promoter's fee and all local expenses have been paid.

4. On some occasions, the international promoter may contact a local venue directly to reserve or book the venue for a particular show to ensure that the tour dates and locations are reserved in advance and coincide with the performers' schedules and availability. This may occur where the venues must be reserved before a local promoter is identified. In the event the international promoter advances expenses the local promoter is obligated to pay, the local promoter must reimburse the international promoter for these expenses.

5. Jagroop Khela is an engineer employed by the California Environmental Protection Agency, and Daljeet Khela (a.k.a.Mintu) works as a loan officer in California. Both Khelas are residents of California. In 2003, the Khelas, who have known Taneja since 2000, expressed to Taneja their interest in venturing into the Bollywood concert promotion business. Prior to the concert tours at issue, neither Jagroop nor Daljeet Khela had ever served as either a local or an international concert promoter. In furtherance of their desire to venture into the Bollywood tour promotion business, Jagroop and Daljeet Khela in August 2003 formed Khela Brothers, a California corporation with its principal place of business in Fresno, California. Jagroop Khela is President of Khela Brothers, and Daljeet Khela serves as its Vice President.

A. Temptation 2004-San Francisco Show

6. During the summer of 2003, Taneja was planning a Bollywood show in the San Francisco, California area starring SRK. This show, ultimately titled "Temptation 2004," was referred to by several names during the planning phase, including "Fires and Flames," "Heartbeats," and "Heartbeats of Bollywood."

7. In July 2003, during the planning phase, Jagroop Khela approached Taneja to request that he and his brother Daljeet serve as the local promoters for the Temptation 2004-San Francisco show. This show was scheduled for July 3, 2004.

8. Taneja testified credibly and convincingly² that, following negotiations, Elite and Khela Brothers reached an oral agreement in October 2003, pursuant to which Khela Brothers would serve as the local promoter for the Temptation 2004-San Francisco show. According to Taneja, the terms of the agreement were (i) that Khela Brothers would act as the local promoter and perform all the duties of a local promoter; (ii) that Khela Brothers would pay Elite a fee of $500,000 for the local promotion rights; (iii) that $150,000 of that fee was due immediately; (iv) that Khela Brothers would pay Elite three (3) installments of $100,000 every sixty days; (v) that the remaining $50,000 would be due on the day of the planned concert; and (vi) that the parties would follow industry custom concerning the respective rights and responsibilities of the international and the local promoter. This oral agreement was reached in the course of a telephone call between Taneja and the Khelas; Taneja and Daljeet Khela were together in a hotel room in Los Angeles; Jagroop Khela was elsewhere and participated in this discussion via conference call.

9. Taneja also testified credibly and convincingly (i) that he intended this agreement to be memorialized in writing; (ii) that he gave Khela Brothers a copy of the contract he typically used when entering into an agreement with a local promoter; (iii) that it is Taneja's standard practice not to sign the contract until the local promoter returns the signed contract; and (iv) that, despite repeated assurances from Jagroop and Daljeet Khela that the contract would be signed and returned, this never occurred.³

10. Elite claims that Khela Brothers has paid only $88,000 of the $500,000 it owed on the Temptation 2004-San Francisco oral contract. By contrast, Khela Brothers claims it has paid Elite $237,000 under this contract. On the basis of Taneja's testimony, as well as the record as a whole, it appears that defendants have paid $188,000 of the $500,000 they owed Elite pursuant to the Temptation 2004-San Francisco oral contract as described by Taneja. Specifically, the record reflects that the following four payments were made to Elite on behalf of Khela Brothers for the Temptation 2004-San Francisco show:

                Date               Amount     Payor
                January 6, 2004    $37,000    Music Hut4
                January 8, 2004    $50,000    Music Hut
                April 20, 2004     $50,000    Sima Elemadi5
                May 14, 2004       $50,000    Avnish Agnihotri6
                

11. In addition to these four payments, the record reflects that on May 18, 2004, Avnish Agnihotri wired $50,000 to Elite. This money was not intended as partial payment of the Khela Brothers' contractual obligations to Elite; rather, it was intended as a loan to Khela Brothers from Balkar Singh, an associate of the Khelas. The record is unclear what relationship, if any, existed between Avnish Agnihotri and Balkar Singh. And, the record is equally unclear on why Agnihotri wired the money through Elite rather than sending it directly to Khela Brothers. Nonetheless, the record confirms (i) that these funds were intended as a loan to Khela Brothers; and (ii) that Taneja treated it as such. After receiving the funds, Taneja on May 18, 2004 wired $49,000 to the Khela Brothers. Because the bank expressed concern to Taneja about this transaction, Taneja withheld $1,000 from the amount wired to Khela...