Graham v. Scissor-Tail, Inc.

• Decision Date: 05 February 1981
• Docket Number: SCISSOR-TAI,INC
• Citation: 623 P.2d 165,171 Cal.Rptr. 604,28 Cal.3d 807
• Parties: , 623 P.2d 165, 106 L.R.R.M. (BNA) 2914, 93 Lab.Cas. P 55,330 Bill GRAHAM, Plaintiff and Appellant, v., Defendant and Appellant. L.A. 31261
• Court: California Supreme Court

Page 604

171 Cal.Rptr. 604

28 Cal.3d 807, 623 P.2d 165, 106 L.R.R.M. (BNA) 2914,

93 Lab.Cas. P 55,330

Bill GRAHAM, Plaintiff and Appellant, v. SCISSOR-TAIL, INC., Defendant and Appellant.

L.A. 31261.

Supreme Court of California, In Bank

Feb. 5, 1981.

Review Denied July 25, 1990.

Mitchell, Silberberg & Knupp and Thomas P. Lambert, Los Angeles, for plaintiff and appellant.

Schwartz & Dreifus and Jordan A. Dreifus, Los Angeles, as amici curiae on behalf of plaintiff and appellant.

Fierstein & Sturman, Harvey Fierstein and Mark J. Linder, Los Angeles, for defendant and appellant.

Levy & Goldman, Abe F. Levy, Gerald Goldman and Elizabeth Garfield, Los Angeles, as amici curiae on behalf of defendant and appellant.

THE COURT:

These are two consolidated appeals. Plaintiff Graham appeals from a judgment confirming the award of an arbitrator. ¹ (Code Civ.Proc., §§ 1287.4, 1294, subd. (d), 1294.2.) Defendant Scissor-Tail, Inc., appeals from a special order after judgment taxing costs relating to attorney's fees. (Code Civ.Proc., § 1294, subd. (e).) We will reverse the judgment confirming the award, directing the trial court to vacate its order compelling arbitration (see fn. 1, ante ) and conduct further proceedings. We will dismiss the appeal from the special order after judgment as moot, 103 Cal.App.3d 66, 162 Cal.Rptr. 798.

I

Plaintiff Bill Graham is an experienced promoter and producer of musical concerts. Defendant C. Russell Bridges, also known as Leon Russell (Russell), is a successful performer and recording artist and the leader of a musical group; he is also a member of the American Federation of Musicians (A.F. of M.). Defendant Scissor-Tail, Inc. (Scissor-Tail) is a California corporation, wholly owned by Russell, which serves as the vehicle by which the services of Russell and his group are marketed. Defendant David Forest Agency, Ltd. (Forest) was, at the time here relevant, acting in the capacity of booking agent for Scissor-Tail.

Early in 1973, Scissor-Tail and Russell decided to formulate and structure a personal appearance tour for the latter and his group. Forest was engaged to assist in this project, and at the suggestion of Dennis Cordell, Russell's personal manager and an officer of Scissor-Tail, contacted plaintiff Graham, who had previously promoted a number of Russell concerts, to request that he provide his services for four of the twelve concerts on the projected tour. A series of four contracts was prepared covering, respectively, concerts at Ontario, Oakland Long Island, and Philadelphia. Graham signed all four contracts; Scissor-Tail (per Dennis Cordell), for reasons to appear, signed only those relating to the Ontario and Oakland concerts, which were to occur on July 29 and August 5, 1973.

The four contracts in question were all prepared on an identical form known in the industry as an A.F. of M. Form B Contract; in this case each bore the heading of the Forest agency. Aside from matters such as date and time, they differed from one another in only two areas i. e., the contents of the blanks designated "hours of employment" and "wage agreed upon." The former dealt with matters such as hours of performance and the provision of a guest artist to appear on the program prior to the Russell group. The latter provided that payment was to be "applicable A.F. of M. scale" or a specified percentage (85 percent in the case of Ontario, Oakland, and Philadelphia; 90 percent in the case of Long Island) "of the gross receipts after bonafide, receipted, sanctioned expenses and taxes, whichever is greater." Also here indicated in each case was the capacity of the concert site, the price of tickets, and the potential gross.

The contracts designated Graham as the "purchaser of music" or "employer," the seven members of the group as "musicians." They did not speak explicitly to the question of who was to bear any eventual net losses. The contract forms also provided: "9. In accordance with the Constitution, By-laws, Rules and Regulations of the Federation, the parties will submit every claim, dispute, controversy or difference involving the musical services arising out of or connected with this contract and the engagement covered thereby for determination by the International Executive Board of the Federation or a similar board of an appropriate local thereof and such determination shall be conclusive, final and binding upon the parties." ²

As indicated above, all four contracts were signed by plaintiff Graham, his signature appearing below his typed name on a blank designated "signature of employer." Only those contracts relating to the Ontario and Oakland concerts bore a corresponding signature; on those contracts, below the typed name "Scissor-Tail, Inc. by C. Russell Bridges aka Leon Russell" and on a blank designated "signature of leader," is the signature of Dennis Cordell, who as above indicated was Russell's personal manager and an officer of Scissor-Tail.

On the second page of each contract is a list of the seven musicians involved (including Russell), together with an indication of the A.F. of M. local of each.

The Ontario concert took place as scheduled and had gross receipts of $173,000 (out of a potential gross reflected in the contract of "$450,000 plus"), with expenses of $236,000, resulting in a net loss of some $63,000. The Oakland concert also took place, resulting in a net profit of some $98,000. Following this second concert a dispute arose among the parties over who was to bear the loss sustained in the Ontario concert and whether that loss could be offset against the profits of the Oakland concert Scissor-Tail and Forest taking the position that under the contract Graham was to bear all losses from any concert without offset, Graham urging that under standard industry practice and custom relating to 8 5/15 and 9 0/10 contracts such losses should accrue without offset to Scissor-Tail, et al. This dispute remaining unresolved, ³ Scissor-Tail declined to execute the contracts for the Long Island and Philadelphia concerts; apparently these concerts took place as scheduled, but some party other than Graham performed the promotional services.

In October 1973, Graham filed an action for breach of contract, declaratory relief, and rescission against all defendants. Scissor-Tail responded with a petition to compel arbitration. After once ordering arbitration, the trial court in 1974 granted reconsideration in order to permit discovery "limited to the issues of whether an agreement to arbitrate was entered into and whether grounds exist to rescind such agreement ...." ⁴ Following such discovery, and in light of resulting depositions lodged with it, the court in March of 1976 finally granted the petition and ordered arbitration. Along with its order, and at Graham's request, the court filed formal findings of fact and conclusions of law. ⁵

By letter dated April 12, 1976, the A.F. of M. was advised of the court's order. By late June, however, no hearing date had been set and counsel for Scissor-Tail wrote to the union requesting that a date be set and suggesting certain dates convenient to him. Rather than comply with this request, however, the union, through its International Executive Board, on July 6 issued its decision awarding the full amount of Scissor-Tail's claim against Graham, or some $53,000. ⁶ Counsel for Graham, protesting against this procedure, was informed by the A.F. of M. that it conformed with normal practice, which contemplated the entry of award without hearing. Thereupon counsel for Graham enlisted the assistance of Scissor-Tail's counsel in the matter and, upon securing the latter's consent, was successful in reopening the matter and having it set for hearing.

In the meantime, on August 10, 1976, Graham had been placed on the union's "defaulter's list" apparently a list of persons with whom union members may not do business.

On September 10, 1976, Scissor-Tail ⁷ increased the claim by $20,000 to a total of some $73,000, urging that some of the expenses claimed by Graham with respect to the two concerts were improper. Scissor-Tail further requested interest on the award and $15,000 as attorney's fees.

On October 29, 1976, a hearing was held at the union's western (Hollywood) office before a "referee" appointed by the union president. The referee was a former executive officer and a long-time member of the union; he had acted as a hearing officer in many previous union matters. All parties (excluding Russell himself) and counsel were present. Graham sought to have the proceedings transcribed by a court reporter brought by him; the request was denied and the reporter excused. The hearing thereupon proceeded. Graham produced considerable evidence consisting of his own testimony, the testimony of another promoter, the stipulated testimony of a third promoter, and three sworn statements by others engaged in the popular music concert field to the effect that under common and widely held custom and practice in the industry, the promoter under a 9 0/10 or 8 5/15 contract was understood to bear no risk of loss because his share of the profits under such contracts was considerably smaller than under the "normal" contract, under which the promoter takes a larger percentage of the profits but is understood to bear the risk of loss; no contrary evidence was offered by Scissor-Tail. The referee also heard evidence regarding the propriety of certain expenses claimed by Graham and questioned by Scissor-Tail.

On November 5, 1976, in his report to the union's International Executive Board, the referee recommended that Graham be ordered to pay to Scissor-Tail the amount of its original claim (some $53,000; see fn. 6, ante ). The balance of the claim consisting of the items added by Scissor-Tail's September 10 request was denied, the referee noting that the union had issued no directions to him regarding it.

On February 22, 1977, the union's International...