Kerner v. Hughes Tool Co.
| Decision Date | 01 April 1976 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Lewis KERNER, Plaintiff and Respondent, v. HUGHES TOOL COMPANY, (now Summa Corporation) dba Frontier Hotel, Defendant and Appellant. Civ. 45449. |
Arthur J. Crowley Professional Corp. by Arthur J. Crowley and Howard E. Blumenthal, Hollywood, for plaintiff and respondent.
Defendant Hughes Tool Company (now Summa Corporation) doing business as Frontier Hotel appeals the judgment in favor of plaintiff Lewis Kerner in an action for breach of contract. The trial court found that defendant repudiated an agreement for plaintiff to produce 'My Fair Lady' in the main showroom of the Frontier Hotel in Las Vegas for twenty-six weeks at $75,000 per week. The court assessed damages from loss of profits of $10,000 a week at $260,000.
The evidence, viewed in a light most favorable to the judgment (Crawford v. Southern Pacific Co., 3 Cal.2d 427, 429, 45 P.2d 183), shows:
Plaintiff Lewis Kerner had spent his life in show business, first as entertainer, then as producer, agent, the talent director. He helped bring the first motion pictures to television, produced religious short subjects for television, and later produced the motion picture, 'Never on Sunday.'
Frank Sennes had been a hotel entertainment director in Las Vegas since 1950. He handled the booking of entertainment and had the responsibility for presentation of million-dollar spectaculars, some of which ran for more than a year. In 1968 Sennes was entertainment director of the Frontier, Desert Inn, and Stardust Hotels. He had always worked as an independent contractor under oral agreement. When defendant purchased the Frontier Hotel in 1967 Sennes asked for a written contract but consented to continue to serve on oral agreement when defendant's representatives said everything would be all right. Defendant always honored contracts made on Sennes' signature. The title on the door of his office read 'Entertainment Director,' and the marquee of the Frontier Hotel bore the legend 'Frank Sennes Presents.'
In 1968 plaintiff put together a variety show called 'Let's Make Love' and auditioned it for Sennes. Sennes signed a contract on behalf of the hotel to pay $10,000 a week for the show. It opened in February 1969 in the hotel lounge and played for several weeks.
While plaintiff was preparing the variety show for production he proposed to Sennes a production of the musical 'My Fair Lady' for the main showroom of the On 26 June 1968 Sennes told plaintiff that if he could deliver 'My Fair Lady' for $75,000 per week including orchestra he had a deal. Plaintiff said at that price he would need a year to amortize costs. Sennes agreed. Plaintiff said it would be a class A production with top stars. Sennes said he would leave the casting to plaintiff and that he would get the money from the hotel for preproduction costs.
Frontier Hotel. Sennes spoke about the musical to Mr. Schwind, the managing director of the hotel, and Schwind said if Sennes liked it he would go along.
On 27 June 1968 Sennes gave plaintiff the following letter on Frontier Hotel stationery:
Dear Lew:
This is to advise you that I am ready, willing and able, and will play 'My Fair Lady' around February or March of 1969 at the Frontier Hotel for a minimum guaranteed run of one year at Seventy-five Thousand ($75,000.00) Dollars weekly for show and orchestra.
It is further agreed and understood that if you are unable to bring 'My Fair Lady' in for a price of $75,000.00 that you will notify me immediately and in no event later than August 27, 1968.
This agreement will serve as a firm commitment.
Sincerely,
/s/ FRANK SENNES
FRANK SENNES
During the following weeks plaintiff made several trips to New York for the sole business purpose of arranging to produce 'My Fair Lady.' He obtained the music and book and began negotiations with CBS, Inc., the owner of the rights to the musical. CBS eventually agreed to permit plaintiff to present 'My Fair Lady,' shortened to ninety minutes to meet Las Vegas standards, on condition that plaintiff pay royalties of $240,000 for a one-year minimum use of the musical, obtain a bank guarantee of his performance, and allow Edwin Lester, who was presenting 'My Fair Lady' in Los Angeles, cast approval and script approval. Plaintiff traveled to Dallas to view a production of 'My Fair Lady' and inquire about costs, use of sets, and employment of performers. Plaintiff began to line up stars for his production, and he arranged for use of scenery and costumes that had been used in other presentations of the musical. He subsequently obtained Edwin Lester's agreement to act as artistic consultant.
On 4 August 1968 plaintiff wrote Sennes:
'It was good talking to you yesterday.
'This letter will confirm our telephone conversation.
'I am very happy and pleased to report that CBS has now given me permission to reduce the playing time of 'My Fair Lady' to a one-half-and-a-half presentation.
'With reference to your letter of June 27th, the agreed upon price of $75,000.00 per week for show and orchestra is okay.'
About mid-August 1968 plaintiff gave Sennes a copy of the formal licensing agreement CBS wanted him to sign. In September 1968 Sennes told plaintiff he was being criticized for making a one-year deal and having trouble placing already-booked attractions at other hotels. He asked plaintiff to reduce the commitment for the production to six months. On 16 September 1968 Sennes wrote plaintiff:
'We have been advised that 'My Fair Lady' will not be available at the time referred to in our referenced letter. We further understand that its unavailability is due to Mr. Edwin Lester having priority in showing the same in Los Angeles and San Francisco, therefore, it is not available until after September, 1969.
'Due to the change in availability, we must reduce our guarantee to six months with three month options.
'May we hear from you in the near future regarding an open date convenient to all parties.'
CBS subsequently consented to the six-month reduction and sent plaintiff a revised license agreement which specified an opening date of January 1970 and a minimum six-month performance.
Attorneys for defendant prepared a contract for the production of 'My Fair Lady.' When Sennes showed it to plaintiff, the latter became upset because the contract did not reflect their understanding. Sennes continued to assure plaintiff they had a firm deal. Plaintiff prepared his own written version of the contract, and Sennes agreed it accurately reflected their understanding. Plaintiff's document specified in part that the hotel would provide $150,000 preproduction costs and all required stagehands and that plaintiff and CBS would retain artistic control over the production.
In February 1969 Richard Danner became managing director of the Frontier Hotel, a position he held pursuant to oral agreement with defendant. Plaintiff was introduced to Danner as the man who was bringing 'My Fair Lady' to the hotel. Plaintiff tried several times to talk with Danner about presenting the musical at the hotel, but Danner told him the matter was foreign to him and referred plaintiff to Sennes.
In May 1969 plaintiff twice met with Danner. Danner expressed concern about presenting 'My Fair Lady' and said he would rather play more profitable single acts than a Broadway show. He proposed the hotel be given the right to cancel the show on two-weeks' notice. Plaintiff said cancellation was unacceptable to him and he had Sennes' written commitment to do the show. Danner replied that he did not know a written commitment existed. An article then appeared in a Las Vegas newspaper quoting Sennes as saying he had changed his mind about presenting 'My Fair Lady' at the Frontier Hotel. In June 1969 plaintiff wrote to Robert Maheu, chief of defendant's Nevada operations, asking him to correct the wrong that had been done to him. Danner then wrote plaintiff a letter in which he stated in part:
'At the conclusion of that last meeting, I got the impression that you felt that we were in some way obligated to you which completely surprised me to say the least.
'Lew, the reason that I have gone to such lengths in reiterating the history of our negotiations with you, is because I want to make clear my position that we do not consider ourselves obligated to you in any way. At the same time, I recognize that you are a man with talent and ability, and I see no reason why future business undertakings might not be mutually advantageous to us. Although I am new here at the Frontier Hotel, I am satisfied after my discussions with Frank Sennes, that we have at all times dealt with you in good faith and in is open, straight forward manner, and it is in keeping with that policy that I wish to frankly tell you that I am still not convinced that 'My Fair Lady' or 'Around the World in 80 Days' would assure us the business that we have with the leading individual entertainers. Further, it was my impression from our last meeting that you too were somewhat uncertain about the chances for the successful presentation of 'My Fair Lady.' In any event, it is my belief at this time, that we will be better off staying with top name individual entertainers rather than either of the plays which you have offered to us.
'The next time you are in Las Vegas, come by to see me.'
Sennes was later authorized to offer Kerner $50,000 to settle his claim, but Kerner refused the offer. Danner instituted a policy at the Frontier Hotel that no contract could be executed without his approval.
Plaintiff testified that while negotiating on 'My Fair Lady' he prepared two budgets.
Amortizing costs over a year, one budget...
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