Wyler Summit Partnership v. Turner Broad. Sys.

• Decision Date: 07 December 2000
• Docket Number: No. 99-15773,99-15773
• Citation: 235 F.3d 1184
• Parties: (9th Cir. 2000) WYLER SUMMIT PARTNERSHIP, a Partnership, Plaintiff-Appellant, v. TURNER BROADCASTING SYSTEM, INC., a Georgia Corporation; TURNER ENTERTAINMENT CO., a Georgia Corporation, Defendants-Appellees
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1184

235 F.3d 1184 (9th Cir. 2000)

WYLER SUMMIT PARTNERSHIP, a Partnership, Plaintiff-Appellant, v. TURNER BROADCASTING SYSTEM, INC., a Georgia Corporation; TURNER ENTERTAINMENT CO., a Georgia Corporation, Defendants-Appellees.

No. 99-15773

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted October 3, 2000

Filed October 26, 2000

Amended December 7, 2000

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Jonathan R. Bass, and Keith Evans-Orville, Coblentz, Patch, Duffy & Bass, LLP, San Francisco, California, for the plaintiff-appellant.

M. Laurence Popofsky, and Christian E. Mammen, Heller Ehrman White & McAuliffe, San Francisco, California, for the defendants-appellees.

Appeal from the United States District Court for the Northern Division of California Saundra B. Armstrong, District Judge, Presiding. D.C. No.CV-95-03452-SBA

Before: Dorothy W. Nelson, David R. Thompson, and Stephen S. Trott, Circuit Judges.

ORDER

The opinion filed October 26, 2000, is hereby amended as follows:

The slip opinion at 13486, lines 1-2, after the sentence that reads: "Because waiver is an equitable doctrine, Turner argues, the `gist' of Wyler Summit's claim is equitable."

[ADD TWO NEW PARAGRAPHS]:

Initially, Turner points to some 19th century California cases involving issues of waiver, and argues that because those cases were tried in courts of equity, any time a plaintiff relies on waiver as a basis for relief, the action must be equitable. The problem with Turner's argument is that the cases it identifies sought specific performance, as opposed to money damages. See Cooper v. Pena, 21 Cal. 403, 411, 1863 WL 493 (Cal. 1863) ("This is an action to compel the defendant to convey to the plaintiff a tract of land . . . .") (emphasis added); Farley v. Vaughn, 11 Cal. 227, 233, 1858 WL 735 (Cal. 1858) ("This was a bill filed for a specific performance of a contract for the sale of certain real estate") (emphasis added). Specific performance of a real estate contract unquestionably is an equitable remedy.

The fact that Wyler Summit seeks money damages, as opposed to specific performance, does not, by itself, render its action one at law. But, as stated above, the legal or equitable nature of a cause of action is ordinarily determined by the remedy sought. See Raedeke, 517 P.2d at 1160. That the plaintiffs in Farley and Pena sought specific performance of a real estate contract is sufficient to distinguish those cases from the case at bar.

At slip opinion 13486, the first sentence of the first full paragraph, which reads: "Moreover, Turner's argument over-looks a critical distinction."

[CHANGE TO]:

"Moreover, Turner's argument overlooks a critical distinction."

At slip opinion 13486, the first line of the second full paragraph, which reads: "Ironically, the cases Turner cited in its brief and at oral argument illustrate this distinction."

[CHANGE TO]:

"Ironically, the cases Turner cited in its brief and at oral argument illustrate this distinction."

At slip opinion 13487, at the end of the first full paragraph, after the sentence that reads: "Therefore, C & K Engineering did not sue for breach of contract at all; rather, it sued for equitable relief under the doctrine of promissory estoppel. See id."

[ADD]:

; see also Jaffee v. The Albertson Co., 53 Cal.Rptr. 25, 30 (Cal. Ct. App. 1966) (finding Jaffee's suit to be in equity because complaint alleged breach of contract based on an "oral contract" and an"oral promise"); Ford v. Palisades Corp., 225 P.2d 545, 546 (Cal. Ct. App. 1950) (finding Ford's suit to be in equity because "[t]he complaint alleged that the period of employment was extended by oral agreement and that the facts which plaintiff claims estop defendant from invoking the statute of frauds").

With these amendments, the petition for rehearing filed November 8, 2000, is DENIED.

OPINION

TROTT, Circuit Judge:

Wyler Summit Partnership ("Wyler Summit") sued Turner Broadcasting System, Inc. and Turner Entertainment Co. (collectively "Turner") for breach of contract involving the motion picture Ben Hur. The district court granted summary judgment in favor of Turner, and Wyler Summit appeals. Wyler Summit contends that the district court improperly granted summary judgment based on the doctrines of constructive receipt, judicial estoppel, and laches. Wyler Summit also argues that a genuine issue of material fact exists as to whether a particular provision of a 1958 contract between film director William Wyler and Metro Goldwyn Mayer ("MGM") was inserted for the sole benefit of Mr. Wyler or for the mutual benefit of both parties. Finally, if remand is warranted, Wyler Summit asks us to remand the case to a different district court judge.

We have jurisdiction pursuant to 21 U.S.C. S 1291, and after reviewing the district court's order de novo, we REVERSE and REMAND.

I Factual Background

This case is before us for the second time. See Wyler Summit Partnership v. Turner Broadcasting Sys., 135 F.3d 658 (9th Cir. 1998) ("Wyler I"). Our previous opinion thoroughly traverses the factual background of this case. Here, we mention only the most relevant facts to the issues now before us.

In 1958, famed film director William Wyler entered into a written contract with MGM to direct Ben Hur. For his services, MGM agreed to pay Wyler $350,000 plus a "percentage compensation" equal to three percent of the film's gross receipts in excess of $20 million. Another provision of the contract provided that this "percentage compensation" was to be paid "in annual installments not to exceed the sum of $50,000 in any one year . . . ." (the "installment payment provision").¹

Ben Hur has been an extraordinary success with critics and at the box office. In addition to garnering more Academy Awards than any other film in history, Ben Hur has earned in excess of $131 million in gross receipts as of January 31, 1995. See Wyler I, 135 F.3d at 660 n.2. Thus, based on the formula set in the contract, Ben Hur has generated approximately $3.3 million in "percentage compensation " for Mr. Wyler and his successor-in-interest, Wyler Summit. Consistent with the terms of the contract, MGM and its sucessor-ininterest, Turner, have paid $1.8 million in annual $50,000 installments to Mr. Wyler and Wyler Summit. Consequently, Turner retains $1.5 million in accrued but unpaid percentage compensation.

In 1995, Wyler Summit attempted to waive the installment payment provision and demanded that Turner immediately pay the entire $1.5 million in unpaid percentage compensation. Turner acknowledged that it owed Wyler Summit $1.5 million in unpaid compensation but rejected Wyler Summit's demand, stating instead that it intended to continue to distribute the money in $50,000 annual installments pursuant to the installment payment provision of the 1958 contract.

When Turner refused to tender immediately the $1.5 million, Wyler Summit filed suit against Turner in federal court, invoking diversity jurisdiction. Among other claims, Wyler Summit alleged that once it waived the installment payment provision, Turner was in breach of contract by refusing to pay immediately all of the accrued but unpaid percentage compensation. Turner moved to dismiss the action for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), and the district court granted Turner's motion.

Wyler Summit appealed to this court. See Wyler I , 135 F.3d 658. In that case, we held that the district court had properly dismissed all of Wyler Summit's claims, except one. Id. at 661. Reversing the district court, we concluded that Wyler Summit had adequately stated a claim for breach of contract and remanded the case. Id. at 664. The sole issue presented on remand was whether Wyler Summit had the right to waive the installment payment provision. Id. And, as we noted under California law, Wyler Summit had the right to waive the provision only if the contracting parties included it in the contract for the sole benefit of Mr. Wyler, not the mutual benefit of Mr. Wyler and MGM. Id.

On remand, Turner moved for summary judgment, asserting four grounds:

1) The constructive receipt doctrine precluded Wyler Summit from waiving the installment payment provision.

2) Wyler Summit was judicially estopped from waiving the provision.

3) Wyler Summit failed to create a genuine issue of material fact that the installment payment provision was included in the contract for the sole benefit of William Wyler, and therefore Wyler Summit could not waive the provision.

4) Even if Wyler Summit could waive the provision, laches provided an affirmative defense.

The district court granted Turner's motion on all four grounds, and Wyler Summit again appealed. We note that Turner has chosen not to defend two of the grounds on which the district court based its decision -constructive receipt and judicial estoppel -even though Turner urged the district court to rule in its favor on those theories. We reject each of the district court's grounds in turn, and deny Wyler Summit's request to remand this case to a different district judge.

II Constructive Receipt

The district court apparently determined that if the contract allowed Mr. Wyler to waive the installment payment provision, such a possibility might have resulted in constructive receipt by him of percentage compensation in excess of $50,000 annually. If the doctrine of constructive receipt would apply, then the Internal Revenue Service could have taxed Mr. Wyler on the entire amount of accrued percentage compensation held by MGM regardless of how much percentage compensation MGM actually distributed to him. The district court observed that "[w]aiver of the annual payment cap on percentage compensation would result in constructive receipt, negating William Wyler's original intent under the contract." Therefore, the court reasoned, the parties could not have intended to allow Mr. Wyler to waive the...