May v. Morganelli-Heumann & Associates
| Decision Date | 15 May 1980 |
| Docket Number | No. 78-1571,MORGANELLI-HEUMANN,78-1571 |
| Citation | 618 F.2d 1363 |
| Parties | , 1978-81 Copr.L.Dec. 25,155 Cliff MAY, Plaintiff-Appellant, v.& ASSOCIATES et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Arthur Stanley Katz, Los Angeles, Cal., for plaintiff-appellant.
John P. Daniels, Acret & Perrochet, John P. Pollock, Los Angeles, Cal., for defendants-appellees.
Appeal from the United States District Court for the Central District of California.
Before WRIGHT, SNEED and FARRIS, Circuit Judges.
Cliff May sued defendants for copyright infringement and unfair competition, contending that they copied several of his drawings. The district court granted defendants summary judgment. May appeals. We have jurisdiction under 28 U.S.C. § 1291, and we reverse and remand for trial because defendants' right to use May's work depends on issues of contract interpretation not properly resolved on summary judgment.
Fletcher Jones hired Cliff May, an architect, on January 17, 1969, to design a residence and horse training facilities, called the Westerly Stud project. Their contract required May to prepare two sets of drawings: the preliminary design drawings and, after Jones's authorization, the final drawings and specifications. May's fee for the preliminary drawings, payable in three installments, was five percent of the final cost of construction. The first payment was due upon completion of a draft of the preliminary drawings, the second upon completion of the preliminary drawings, and the last upon completion of construction of the project. The contract contemplated that the first two payments would total five percent of the cost of construction, estimated at twenty-four dollars per square foot, of the buildings shown in the drawings. The third and final payment was five percent of the amount, if any, that the final cost of construction exceeded the estimated cost. May's fee for the final drawings was an additional five percent of the actual cost of construction. This also was payable in installments, the first when Jones authorized May to begin the final drawings, with the remainder due upon completion of construction. This also was payable in installments, the first when Jones authorized May to begin the final drawings, with the remainder due upon completion of construction. The contract allowed Jones to keep the final drawings, but it required him to return the preliminary drawings to May upon completion of the project. The contract did not mention ownership of the copyright to either set of drawings, and it contained no provision giving Jones a right to use May's work should he be discharged before completion of the project. Displeased with May's progress, Jones discharged May on June 2, 1969. Thereafter he hired the architectural firm of Morganelli-Heumann & Associates to finish Westerly Stud. Prior to May's discharge he had been paid by Jones the sum of $13,962.75. On November 5, 1969, May sued Jones in state court for breach of contract, seeking damages in the amount of $34,055.28, the alleged difference between five percent of the estimated cost of construction and the sum already paid by Jones. Jones counterclaimed for breach of contract, contending that May's drawings were worthless to him. On November 2, 1972, Jones paid May an additional $31,000 to settle the suit, but the parties did not exchange releases. Jones died soon afterward. At this point May had received from Jones a total of $44,962.75.
Shortly before he agreed to settle the state court suit, May discovered some of his preliminary drawings of Westerly Stud in Morganelli-Heumann's files. He then brought this suit against Morganelli-Heumann, several partners and employees of Morganelli-Heumann, and Bank of America, as executor of Jones's estate. May moved for partial summary judgment on the issue of liability for infringement. The Bank responded with a cross-motion for summary judgment and supported its motion with the following contentions: (1) that Jones paid May for the drawings and so owned the copyright to them through operation of the "works for hire" doctrine, (2) that by custom in the architectural profession Jones, upon payment of May for his services, had the right to use the drawings to finish Westerly Stud, and (3) that the contract gave Jones an implied right to use the drawings to finish Westerly Stud. May responded (1) that Jones had not paid him the full contract value for the drawings, (2) that under the circumstances of this case the custom in the architectural profession is that Jones could not make use of May's drawings, and (3) that there is a custom in the architectural profession that the architect retains the copyright to his drawings even if paid for those drawings, and that the parties intended to follow these customs in making the Westerly Stud contract.
In granting the defendants summary judgment, the district court made a "finding of fact" to the effect that Jones discharged all his contractual obligations to May in the state court suit. This made possible the court's conclusion of law that Jones owned the copyright to the drawings under the "works for hire" doctrine. The court also concluded as a matter of law that May had made an election of remedies in bringing his state suit.
The district court made three additional findings of fact, which are important to its disposition of this case, that are as follows:
21. Jones has paid May $44,962.75 for the project drawings and in satisfaction of the Superior Court litigation and all contractual obligations concerning the preliminary drawings for the Westerly Stud Project.
22. There is a custom and usage in the architectural profession within the United States for an architect, at the direction of the owner, to freely utilize preliminary plans prepared by a different architect as the basis for the preparation of working drawings to be used in the construction of the structure contemplated in such preliminary plans, where the owner has severed his contractual relationship with and has paid for services rendered by the original architect who prepared such preliminary plans.
23. It is a custom and usage within the architectural profession in the United States that the architect who prepared preliminary plans has no right to object if such preliminary plans are utilized by a different architect under the circumstances described in the preceding Finding of Fact.
Although findings of fact were unnecessary in deciding this motion for summary judgment, they suggest the reasoning behind the trial court's conclusion that Jones had an implied contractual right to use the drawings.
We hold that the trial court erred in concluding that Jones had discharged all his contractual obligations to May and that by bringing the state suit May had elected a remedy that barred him from bringing this suit. We also hold that the trial court improperly granted summary judgment because there exists a genuine dispute as to the relevant custom and usage of the architectural profession which is a material fact in this case. Fed.R.Civ.P. 56(c). We, therefore, reverse the summary judgment and remand for further proceedings as indicated by this opinion.
The contract between May and Jones, as already pointed out, provided for Jones to make two payments at different stages of the work pertaining to the preliminary drawings. The third payment was contingent upon the final cost of construction exceeding the estimated cost upon which the amount of the first two payments was based. The state court suit brought by May sought no recovery other than for the amounts due with respect to the initial two payments. No recovery with respect to the contingent third payment was sought and no release with respect to it was sought by Jones or provided by May.
Proceeding in this manner was consistent with the design of the contract. Quite clearly Jones and May treated the preliminary drawings as distinct from the working (final) drawings with separate fees payable with respect to each. Each type of drawing was the bargained for consideration for the fee applicable to it. Moreover, there was nothing in the contract that obligated Jones to accept working drawings from May in the absence of Jones's authorization of their preparation in the manner required by the contract. As a consequence, Jones, under the terms of the contract, could accept and pay for the preliminary drawings without assuming a contractual duty to accept and pay for working drawings. May's duty to prepare working drawings was subject to the condition precedent of an authorization by Jones of their preparation. It follows that the contract was divisible. 1
The issue posed by the trial court's holding with respect to an election of remedies by May is whether Jones's failure to pay in full for the preliminary drawings was, if a breach at all, 2 a total breach of the contract for which May either brought, or was required to bring, his action in state court for all damages arising from the total breach. As we view the matter, May was not required to treat Jones's alleged breach as total. Nor did he do so. His claim was limited to the two installments due with respect to the preliminary drawings. So limited, his claim did not address ownership of the plans or the copyright to them, and settlement of the suit did not thereby foreclose this action. May elected to treat Jones's alleged breach as partial and to preserve whatever cause of action that he might have with respect to both the third installment of the preliminary drawings fee and any use of those drawings by Jones contrary to the terms of the contract.
May's right to recover ultimately turns on the custom and usage of the architectural profession. 3 The...
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