MARVEL ENTERPRISES, INC. v. WORLD WRESTLING FEDERATION …

• Decision Date: 11 February 2005
• Docket Number: No. A04A1897-A04A1899.
• Citation: 610 S.E.2d 583,271 Ga. App. 607
• Parties: MARVEL ENTERPRISES, INC. v. WORLD WRESTLING FEDERATION ENTERTAINMENT, INC. et al. Marvel Enterprises, Inc. v. Universal Wrestling Corporation. Universal Wrestling Corporation v. Marvel Enterprises, Inc.
• Court: Georgia Court of Appeals

610 S.E.2d 583

271 Ga. App. 607

MARVEL ENTERPRISES, INC. v. WORLD WRESTLING FEDERATION ENTERTAINMENT, INC. et al.

Marvel Enterprises, Inc. v. Universal Wrestling Corporation.

Universal Wrestling Corporation v. Marvel Enterprises, Inc.

Nos. A04A1897-A04A1899.

Court of Appeals of Georgia.

February 11, 2005.

Sims, Moss, Kline & Davis, Gerald B. Kline, Eric C. Lang, Atlanta, for Marvel Enterprises, Inc.

Chorey, Taylor & Fell, John L. Taylor Jr., Otto F. Feil III, Troutman Sanders, James

A. Lamberth, Wesley V. Tailor, Lynette E. Smith, for World Wrestling Federation Entertainment, Inc. and Universal Wrestling Corporation.

BARNES, Judge.

These three appeals involve the construction of a merchandise license agreement. Marvel Enterprises, Inc., appeals the trial court's grant of summary judgment to World Wrestling Federation Entertainment, Inc. ("WWE") and its wholly-owned subsidiary, WCW, Inc. ("New WCW"). Marvel also appeals the grant of partial summary judgment to Universal Wrestling Corporation, formerly known as World Championship Wrestling, Inc. ("Old WCW") on its third-party beneficiary claim, and appeals the trial court's ruling that the parties' agreement was not ambiguous and thus could not be construed through parol evidence. Finally, Old WCW appeals the trial court's partial denial of its motion for summary judgment on the remainder of Marvel's claims against it. For the reasons that follow, we affirm the trial court in Case Nos. A04A1897 and A04A1898, and reverse in Case No. A04A1899.

Understanding the relationships between the business entities is essential to resolving the issues in this case, although the multiple three-letter acronyms can be confusing. Marvel, formerly known as Toy Biz, contracted with World Championship Wrestling, Inc. (Old WCW), to license certain "elements" to make action figures. Those licensed elements were listed in a schedule attached to the contract that included 116 specific characters, World Championship Wrestling programs, all future television premium channel and pay-per-view programming, and WCW logos and slogans. The schedule further provided that the licensed elements were included only to the extent of Old WCW's ownership or control, and that Old WCW reserved the right to amend the list. Finally, Schedule 1 of the licensing agreement provided that if Old WCW's contractual relationship with the licensed elements terminated before the end of the contract term for any reason, Marvel retained "the right to manufacture and distribute the Licensed Elements as they relate to the Authorized Articles for a period of one year or the remainder of the relationship between WCW and the wrestler; provided said time frame does not exceed the Term of this Agreement."

Several years into the contract, Old WCW sold or assigned some of its assets to a wholly-owned subsidiary of WWE known as W. Acquisition Company. Those assets included most of its intellectual property rights, the merchandise licensing agreement with Marvel, 86 other merchandise licensing agreements, and 23 wrestlers' contracts. The assigned intellectual property rights included the trade name World Championship Wrestling, so after the asset purchase Old WCW changed its name to Universal Wrestling Corporation (Old WCW), and W. Acquisition Company changed its name to WCW, Inc. (New WCW). Old WCW ceased all wrestling promotions, television programming, and other related activities.

According to WWE, it planned to launch a new WCW program portraying Old WCW talent under contract to New WCW, and to license that intellectual property to third parties. Critical to this plan was to obtain clearance for the new program from Viacom, Inc., with whom WWE had an exclusive contract to televise WWE programs. Viacom and WWE were unable to come to terms on programming for New WCW shows, so plans for WCW-branded programs and promotions ended. WWE took the position that, without any ongoing WCW television programming or promotions, the subject matter of its merchandise licensing agreement with Marvel no longer existed.

WWE developed a storyline in its own programming that it was being "invaded" by WCW wrestlers, who were identified on the programs with the WCW logo. WWE wrestlers competed for WCW championship belts. But all of the WCW talent entered into new contracts with WWE, and by fall 2001, WWE's creative team eliminated the WCW storyline and no longer identified any of its wrestlers with WCW. Marvel sued WWE and New WCW for breach of contract. It also sued Old WCW separately for breach of contract, breach of the covenant of good faith and fair dealing, and as a third-party beneficiary of Old WCW's talent contracts with its wrestlers. Following discovery, all of the defendants moved for summary judgment. The trial court granted summary judgment to WWE and New WCW, and granted partial summary judgment to Old WCW on Marvel's third-party beneficiary claim. In Case No. A04A1897, Marvel appeals the grant of summary judgment to New WCW and WWE, and in Case No. A04A1898 appeals the partial grant of summary judgment to Old WCW. In Case No. A04A1899, Old WCW cross-appeals the trial court's denial of its motion for summary judgment on Marvel's remaining claims against it.

In granting summary judgment to WWE, New WCW, and Old WCW, the trial court found that

(1) The License Agreement at issue in this case is not ambiguous, and therefore it is not appropriate for parol evidence to be considered in construing the License Agreement;

(2) WCW had the right to amend the list of Licensed Elements set forth in Schedule "1" of the License Agreement; [and]

(3) Plaintiff Marvel Enterprises, Inc. ("Marvel") acquired no rights to any of the characters of WWE as a result of draping [or using the WCW logo to identify them].

On appeal we review the trial court's grant of summary judgment de novo to determine whether the evidence, viewed in the light most favorable to the nonmoving party, demonstrates a genuine issue of material fact. Summary judgment is proper only when no issue of material fact exists and the moving party is entitled to judgment as a matter of law. Preferred Real Estate Equities v. Housing Systems, 248 Ga.App. 745, 548 S.E.2d 646 (2001). Further, when ruling on a motion for summary judgment, a court must give the opposing party the benefit of all reasonable doubt, and the evidence and all inferences and conclusions therefrom must be construed most favorably toward the party opposing the motion. Moore v. Goldome Credit Corp., 187 Ga.App. 594, 596, 370 S.E.2d 843 (1988). On motions for summary judgment, however, courts cannot resolve the facts or reconcile the issues. Fletcher v. Amax, Inc., 160 Ga.App. 692, 695, 288 S.E.2d 49 (1981). When reviewing the grant or denial of a motion for summary judgment, this court conducts a de novo review of the law and the evidence. Desai v. Silver Dollar City, 229 Ga.App. 160, 163(1), 493 S.E.2d 540 (1997).

Case No. A04A1897

Marvel argues first that the court failed "to give meaning to the exclusivity provisions" of the agreement. WWE responds that Marvel waived this argument by failing to raise it before the trial court, and further responds that Marvel has misread and misapplied the contract's exclusivity provision.

1. WWE argues that Marvel is precluded from raising the exclusivity issue before this court because it did not argue it before the trial court. It is true that "[i]ssues never raised at trial will not be considered for the first time on appeal. [Cit.]" Hammond v. Paul, 249 Ga. 241(1), 290 S.E.2d 54 (1982). In this case, however, the issue of whether Marvel's exclusive right to manufacture WCW action figures continued after New WCW acquired Old WCW's assets was argued in the trial court. In its complaint, Marvel asserted that "Old WCW agreed that under no circumstances would it grant the rights granted to Marvel under the License Agreement to any third party unless Marvel failed to cure a default...." Marvel further contended that "Old WCW also agreed that it would not enter into any agreement with any third party that would conflict or be materially inconsistent with the License Agreement." In its brief in opposition to WWE's motion for summary judgment, Marvel noted on its first page that the parties signed an agreement "under which Marvel was granted the exclusive right to make and sell action figures...." Later in the brief, Marvel argued that WWE "frustrated Marvel's attempts to perform under the License Agreement. Instead, Defendants allowed another toy maker, Jakks, to sell toys of former WCW wrestlers...."

Further, Marvel argued during the hearing on WWE's motion for summary judgment that WWE failed to use due diligence to discover before assuming this exclusive license that it conflicted with its existing exclusive license. WWE chose to honor its existing contract, did not negotiate on Marvel's contract, and chose to be sued instead, Marvel argued. Thus, the issue of whether the license agreement gave Marvel the exclusive right to manufacture certain action figures was clearly argued in the court below, and WWE's argument otherwise is not persuasive.

2. To consider the merits of Marvel's enumeration regarding exclusivity, we must construe the contract before us. In this State,

[t]he construction of contracts involves three steps. At least initially, construction is a matter of law for the court. First, the trial court must decide whether the language is clear and unambiguous. If it is, the court simply enforces the contract according to its clear terms; the contract alone is looked to for its meaning. Next, if the contract is ambiguous in some respect, the court must apply the rules of contract construction to resolve the ambiguity. Finally, if the ambiguity remains after applying the rules of construction, the issue of what the ambiguous language means and what the parties intended must be resolved by a jury. (Cits.)

Schwartz v....