Southern Christian Leadership Conference v. Al Malaikah Auditorium Co.

• Decision Date: 17 May 1991
• Docket Number: No. B039234,B039234
• Citation: 230 Cal.App.3d 207,281 Cal.Rptr. 216
• Parties: The SOUTHERN CHRISTIAN LEADERSHIP CONFERENCE OF GREATER LOS ANGELES, etc., et al., Plaintiffs and Respondents, v. AL MALAIKAH AUDITORIUM COMPANY, etc., Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

Page 216

281 Cal.Rptr. 216

230 Cal.App.3d 207

The SOUTHERN CHRISTIAN LEADERSHIP CONFERENCE OF GREATER LOS ANGELES, etc., et al., Plaintiffs and Respondents, v. AL MALAIKAH AUDITORIUM COMPANY, etc., Defendant and Appellant.

No. B039234.

Court of Appeal, Second District, Division 3, California.

May 17, 1991.

Certified for Partial Publication ^*

[230 Cal.App.3d 210] Joseph W. Fairfield, Los Angeles, for defendant and appellant.

Carl Grumer and Jeffrey C. Walker and Cooper, Epstein & Hurewitz, Beverly Hills, for plaintiffs and respondents.

INTRODUCTION

HINZ, Associate Justice.

In this case an auditorium accepted a deposit from a concert producer to reserve the auditorium on a specific date. Before a lease was executed, the auditorium received a more lucrative offer from another prospective tenant for that date, canceled the concert producer's reservation, and returned the deposit. In the published portion of the opinion, we affirm a jury's finding that in such circumstances the auditorium breached a contract with the concert producer. We also affirm the trial court's award of Code of Civil Procedure section 128.5 sanctions against defendant. In an unpublished portion of the opinion we consider and reject defendant auditorium's remaining contentions of error.

On November 9, 1983, plaintiffs, The Southern Christian Leadership Conference of Greater Los Angeles ("SCLC") and The Foundation for New American Music, Inc. ("FNAM" or "the Foundation") filed a complaint for anticipatory breach of contract, specific performance, temporary restraining order, preliminary injunction, and permanent injunction against defendant Al Malaikah Auditorium Company (dba Shrine Auditorium Co.) and 10 unnamed defendants. The complaint arose from a contract by FNAM to lease the Shrine Auditorium on January 13, 1984, for a concert.

On December 9, 1983, the trial court issued a preliminary injunction against defendants to restrain and enjoin them from using or allowing any person or entity other than plaintiffs to use the Shrine Civic Auditorium on January 13, 1984. By stipulation of both parties, the trial court filed an order to dissolve and vacate the preliminary injunction on December 23, 1983.

After the trial court sustained two demurrers with leave to amend, plaintiffs filed first and second amended complaints for anticipatory breach of contract. On October 21, 1985, defendant Al Malaikah Auditorium Company moved for order adjudicating issues and summary judgment. On November 21, 1985, the trial court denied the summary judgment motion, granted summary adjudication of four undisputed issues, and denied the summary adjudication of remaining substantially controverted issues.

Plaintiffs filed a third amended complaint for anticipatory breach of contract and for tortious denial of the existence of a contract on February 7, 1986.

After both sides rested, out of the jury's hearing, the trial court denied plaintiffs' and defendant's motions for a directed verdict. On September 28, 1988, the jury returned a verdict finding for plaintiffs and against defendant on the breach of contract action, assessing compensatory damages against Al Malaikah Auditorium Company of $100,000; on the second cause of action for bad faith denial of the contract, the jury found for the plaintiffs and assessed exemplary damages against defendant Al Malaikah Auditorium Company of $25,000. Pursuant to Code of Civil Procedure section 128.5, on November 28, 1988, the trial court ordered defendant to pay plaintiffs $27,905.00 sanctions.

A notice of entry of judgment was filed October 18, 1988. On December 14, 1988, the trial court denied defendant's motions for judgment notwithstanding the verdict or alternatively for a new trial.

Defendant Al Malaikah Auditorium Company filed a notice of appeal on December 27, 1988.

FACTS

Jack Elliott, President and Music Director of the Foundation for New American Music and a composer and conductor, produced about 30 musical concerts since the Foundation began in 1979. Formed to raise funds to commission American, jazz-based symphonic music, the Foundation also supports the New American Orchestra to perform commissioned works.

The Foundation desired to produce a concert during Martin Luther King Week in 1984. Because concerts honoring King had sold out the Music Center the previous year, it was decided to move the 1984 event to the Shrine Auditorium, a larger hall.

Elliott talked with Mark Ridley-Thomas, head of the SCLC, about the SCLC's co-sponsoring the event. In May 1983, the Foundation sent a letter to Oakerson of the Shrine Auditorium and a $1,000.00 deposit to reserve the hall for January 13, 1984. The Shrine Auditorium cashed the check and provided a receipt to hold the January 13, 1984, date.

In 1981 or 1982, Elliott had met Oakerson (the Shrine Auditorium manager), decided on a concert date, and given the Shrine a check to reserve the date. When it was later unable to obtain sponsorship for the concert, the Foundation forfeited the $500 deposit.

Before that earlier concert, the Shrine had sent Elliott a lease and also a document setting forth terms, conditions, labor costs, and other information. Elliott had dealt with the Music Center, Royce Hall, Carnegie Hall, Avery Fisher Hall, the Kennedy Center, and other major venues. He testified that leasing a concert hall requires an estimate of labor and other costs. The management of a hall prepares a cost estimate based on information provided by FNAM.

Elliott identified a cost estimate for a January 15, 1982 concert that the Shrine had prepared. He had often been involved with companies producing concerts at the Shrine, although he himself negotiated with the Shrine management only twice, for a 1982 and for a 1983 concert, neither of which materialized. Elliott felt his experience with the Shrine made him familiar with its standard rental terms.

In May 1983, Elliott knew the Shrine lease term regarding rental fees of 10 percent of gross ticket sales with a $2,500 minimum. He was also familiar with the term that states (on Exh. 102) that "[a]s soon as you have definitive show information and have selected a date clear on our calendar, send us a $1,000 good faith deposit ... to hold your date while we are obtaining your cost estimates and preparing your lease," and understood that the Shrine would prepare the cost estimates and lease.

Elliott was also familiar with the sentences stating that "[t]his deposit is only a preliminary deposit to hold the date. It will be applied to your final cost statement along with your event deposit, which is based on your cost estimate, and is taken at the time contracts are signed.... This preliminary deposit is not a guarantee of lease." Costs for sets and electrical, sound, and stage employees were based on union scale, which might have changed from two years earlier.

In Elliott's experience, cost estimates could be received two to three months before the concert, but that would be early; sometimes cost estimates arrived after the concert. He never recalled receiving a cost estimate more than three months before a concert. Nobody from the Shrine in 1983 contacted him to prepare a cost estimate, but the Auditorium could obtain information about a cost estimate from the Foundation or from information submitted in connection with the 1982 concert. When he reserved the date, he said the concert would be the same concert that had been discussed before.

Elliott understood that FNAM would forfeit the $1,000 deposit if it did not produce a concert, as had happened in 1982. Elliott understood that "the acceptance of the involvement of a hall" means that it holds and guarantees the date. Acceptance of the deposit means that the lease would be forthcoming on the auditorium's standard terms. After the Shrine accepted the deposit, Elliott began to book the concert, secure sponsorship, and enlist support of artists. The Foundation obtained a guarantee from Dionne Warwick, Wally Amos, and Grover Washington, Jr. to perform. Elliott also obtained approval of the Foundation's Executive Board of the plans and the SCLC's co-sponsorship. FNAM prepared graphics to announce the concert, and passed information to people in the industry that the concert would be held.

Elliott met with the SCLC and spoke to the principal at a Los Angeles high school to enlist people to work and do a rehearsal. For community involvement, the Foundation invites people who cannot purchase tickets to a free dress rehearsal. Elliott confirmed that FNAM would pay union scale for ushers at the dress rehearsal.

In July 1983, Elliott received a telephone call from Jim Oakerson, who asked if the Foundation could move its date. Oakerson said the Shrine might have another tenant, and it would help the Auditorium if the Foundation could change its date. Elliott said he would investigate, but discovered that moving the date would lose Grover Washington, Jr. and Dionne Warwick. Most importantly it would mean the concert would not occur during Martin Luther King week. The SCLC made it clear that the concert would not be as effective if the date was changed. Elliott informed Oakerson that FNAM could not move the date.

Elliott testified that his conversation with Oakerson, in which Oakerson asked the Foundation to move the concert date, amounted to an acknowledgement by the Shrine Auditorium that they had an agreement that FNAM would use the auditorium on that date.

Elliott wrote an August 10, 1983, letter telling Oakerson that rescheduling would jeopardize the concert. Elliott had not yet received a lease. In their previous conversation, Oakerson had not mentioned the cost estimate.

Elliott identified a September 15, 1983, letter to Oakerson informing him that the Foundation was finalizing the upcoming concert season and requesting a rental agreement for the January 13, 1984, concert for Elliott's signature. Oakerson never sent the rental agreement, and did not respond...