Kemelhor v. Penthouse Intern., Ltd., 85 Civ. 0002 (CHT).

• Decision Date: 03 June 1988
• Docket Number: No. 85 Civ. 0002 (CHT).,85 Civ. 0002 (CHT).
• Citation: 689 F. Supp. 205
• Parties: Barry A. KEMELHOR, Plaintiff, v. PENTHOUSE INTERNATIONAL, LTD., Defendant.
• Court: U.S. District Court — Southern District of New York

689 F. Supp. 205

Barry A. KEMELHOR, Plaintiff, v. PENTHOUSE INTERNATIONAL, LTD., Defendant.

No. 85 Civ. 0002 (CHT).

United States District Court, S.D. New York.

June 3, 1988.

COPYRIGHT MATERIAL OMITTED

Scheffler Karlinsky & Stein, New York City (Martin E. Karlinsky, of counsel), for plaintiff.

Grutman Miller Greenspoon & Hendler, New York City (Jeffrey H. Daichman and Joseph Santora, of counsel), for defendant.

OPINION

TENNEY, District Judge.

This is a diversity action for wrongful discharge from employment and breach of contract brought by plaintiff Barry A. Kemelhor ("Kemelhor") against defendant Penthouse International, Ltd. ("Penthouse"), the publisher of PENTHOUSE magazine. Penthouse asserts a counterclaim alleging that Kemelhor materially breached the contract thereby entitling Penthouse to terminate it. In addition, Penthouse requests restitution for the salary and other payments it paid Kemelhor. With the consent of the parties, the case was tried to the court. Pursuant to Fed.R. Civ.P. 52(a), the court makes the following Findings and Conclusions.

FINDINGS OF FACT

Kemelhor has been a collector of photographs of celebrity nudes since 1977, and since September 1979, he has engaged in the commercial exploitation of his collection by entering into agreements with several men's magazines allowing them to publish items from his collection. Trial Transcript ("Tr.") at 15-19.

On September 9, 1981, Kemelhor wrote a letter to Penthouse which stated that he was interested in offering both his collection and his services to the magazine. Plaintiff's Exhibit ("Pl.Exh.") 1. The service offered was his alleged unique ability to locate nude photos of women published before the subjects had become famous. Tr. 17. At the time Kemelhor contacted Penthouse, Kemelhor claimed that he had amassed a collection of more than 100,000 photographs. Id.

The photographs forming the collection offered to Penthouse were not taken by Kemelhor. Rather, Kemelhor had cut out many of these pictures from numerous magazines, books, and similar sources. Some pictures were publicity stills issued by various movie studios. Tr. 27, 29, 30. The women in the photographs ranged from early film starlets to current celebrities. Pl.Exhs. 3, 4, 5, 6.

Subsequent to his preliminary communication with Penthouse, Kemelhor met with Joe Brooks ("Brooks"), the art director of PENTHOUSE, on October 23, 1981. At the meeting Kemelhor displayed a number of pictures from his collection. Kemelhor informed Brooks that he was not a photographer and explained how he had assembled his collection. Kemelhor and Brooks discussed the potential risks that publication would entail. Tr. 27-30. The meeting concluded with Brooks telling Kemelhor that Penthouse would be following up on this discussion. Tr. 31.

Penthouse contacted Kemelhor and a meeting with its chairman of the board, Bob Guccione ("Guccione"), was arranged. Kemelhor met with Guccione on November 13, 1981 for more than five hours. Kemelhor disclosed to Guccione the nature of his collection, Tr. 35-38, and Kemelhor also exhibited a number of photos from his assemblage. Tr. 32-42. Guccione displayed substantial interest in the photographs and also in the manner in which Kemelhor had built his collection. Guccione told Kemelhor that he would be deciding how best to consummate an agreement. Tr. 40-41.

A second meeting between Kemelhor and Guccione was held on December 30-31, 1982. Tr. 43-45. This discussion focused on the structure of an agreement including potential feature articles and special editions. Tr. 50-52. At the end of the meeting, Guccione told Kemelhor that Penthouse would draft an agreement. Tr. 52-53.

After a series of drafts were sent back and forth, an agreement dated April 16, 1982 was executed. Pl.Exh. 40. The pertinent provisions of the agreement were as follows:

1. The Employer hereby employs Employee in its business, and Employee hereby agrees to work for the Employer, as a feature columnist for, and senior editor of, PENTHOUSE MAGAZINE (the "Magazine"), and senior contributing editor of certain books and other publications intended to be published by Employer, as more particularly described herein.

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3. Employee represents and warrants that:

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B. He, as the collector of such pictures, is the owner of the Library, has obtained the pictures constituting the Library from publications and other sources in the public domain and is under no known obligation to make payment to anyone by reason of his possession or use thereof.

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6. Employee shall be paid hereunder as follows:

A. During the first year of the Initial Employment Period, Employer shall pay to Employee a salary at the rate of Fifty Two Thousand Dollars ($52,000) per annum ("Base Salary") in equal monthly installments payable on the 1st day of each calendar month, commencing May 1, 1982.

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C. Employer shall pay to Employee the sum of Thirty Thousand Dollars ($30,000) in two equal installments, $15,000 upon the execution of this agreement and $15,000 on September 1, 1982....

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8. Employee acknowledges that the Employer, as publisher, has the final decision making authority as to the Pictures and textual material which will be utilized and be published in the Magazine. In the event the Employer determines in its sole and absolute discretion that publication of the Feature and the use of the Pictures has been and/or will cause legal problems which do not justify such publication, Employer shall give Employee written notice of its intent to terminate this Agreement. In such event Employer shall have no further liability or obligation hereunder except to (i) pay Employee three (3) months severance pay, which shall be based upon all amounts payable under Section 6(A) hereof, and (ii) return to Employee any and all pictures not owned by Employer. ...

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13. Employee acknowledges the importance of the exclusivity of his services to the Employer hereunder....

(Emphasis added).

Subject to the termination provisions of Section 8, Kemelhor's employment was to commence on May 1, 1982 and continue for a five-year period terminating April 30, 1987 with provision made for the negotiation of an extension.

Kemelhor was to receive an annual salary of $52,000 payable in equal monthly installments, and was to be reimbursed for his expenses. In addition, Kemelhor was to receive $30,000 in two equal installments, $15,000 on the signing of the agreement and $15,000 on September 1, 1982, which amounts were not to be refundable in the event no royalties on possible book publications were forthcoming.

Kemelhor initiated his performance under the contract by submitting a feature to Penthouse in mid-May 1982. It was titled "Pre-Vues of Coming Attractions." Pl. Exh. 41. The feature contained forty-one photographs. Kemelhor did not receive immediate feedback from Penthouse regarding the feature. Tr. 90. The feature and the pictures contained therein have never been returned to Kemelhor. Tr. 87-88. Although the exact whereabouts of the material is unknown, Penthouse concedes it retains possession. Tr. 328.

Kemelhor submitted his second and last feature to Penthouse on July 12, 1982. Tr. 90. Kemelhor testified that after submitting his second feature Guccione explicitly instructed him not to submit a feature every month but rather have one feature ready for publication at all times. Tr. 104-05. The second feature coined "Legends of the Screen," contained seventy-three pictures. Pl.Exh. 42. The feature included pictures of Joan Crawford, Carol Lombard, Clara Bow, and Jean Harlow. Id. Shortly following this final submission, Penthouse's art director, Frank DeVino ("DeVino") telephoned Kemelhor regarding the submission. DeVino inquired of Kemelhor whether he had any original photographic material. Kemelhor replied that he did not possess any photographic negatives since he had cut out the pictures from books and magazines. DeVino told Kemelhor that the material furnished was sufficient. Tr. 92.

On July 29, 1982, Kemelhor was contacted by Jonathan Black ("Black"), a senior editor of PENTHOUSE. Tr. 92-93. During the course of their phone conversation, Black informed Kemelhor that he was drafting an introduction to the first feature and needed some background information concerning both the pictures and Kemelhor. Kemelhor furnished Black with his biographical background. They also scheduled a meeting to be convened in New York on August 4, 1982. In advance of the meeting and pursuant to Black's request, Kemelhor sent Black a list of the sources for the pictures constituting the first feature. Tr. 93-95. The list provided by Kemelhor stated that the sources for the feature were magazines such as BUNTE, HIGH SOCIETY, LIFE, NEWSWEEK, and others. Pl.Exh. 45. The meeting took place as scheduled on August 4, 1982. At the meeting, Black asked additional questions regarding the sources of the feature. Tr. 95. During Kemelhor's visit to New York he requested and was granted a meeting with Guccione. Kemelhor expressed concern with Penthouse's lack of communication with him but was assured by Guccione that no problem existed. Tr. 102. Kemelhor also presented to Guccione a proposal for a special edition of PENTHOUSE. Kemelhor had assembled a collection of seventy-three nude or semi-nude poses of actresses who had won or been nominated for best supporting actress. The compilation was titled "The Anatomy Awards." Tr. 103; Pl.Exh. 46. Guccione expressed strong interest in Kemelhor's idea. Tr. 104.

On September 1, 1982, the second half of the $30,000 non-refundable advance against royalties was due Kemelhor. Penthouse did not make this payment. Tr. 113-14. Kemelhor advised David Myerson ("Myerson"), Penthouse's chief operating officer and general counsel, that he did not receive the payment. Myerson told Kemelhor that he would receive it shortly. Tr. 116. Although Myerson may have at that point in time...