Melchior v. New Line Productions, Inc.

131 Cal. Rptr. 2d 347, 106 Cal. App. 4th 779, 2003 Cal. Daily Op. Serv. 1855, 2003 Daily Journal DAR 2317, 2003 Cal. App. LEXIS 299
CourtCalifornia Court of Appeal
DecidedFebruary 28, 2003
DocketB153239
StatusPublished
Cited by129 cases

This text of 131 Cal. Rptr. 2d 347 (Melchior v. New Line Productions, Inc.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Melchior v. New Line Productions, Inc., 131 Cal. Rptr. 2d 347, 106 Cal. App. 4th 779, 2003 Cal. Daily Op. Serv. 1855, 2003 Daily Journal DAR 2317, 2003 Cal. App. LEXIS 299 (Cal. Ct. App. 2003).

Opinion

*782 Opinion

SPENCER, P. J.

Introduction

Plaintiff lb Melchior appeals from a summary judgment in favor of defendant New Line Productions, Inc. He claims the trial court made errors of law which led to an erroneous grant of the summary judgment. We agree as to some of his claims of error and reverse the judgment in part.

Facts 1

On June 17, 1994, lb Melchior (Melchior) and Mark W. Koch (Koch), on behalf of Prelude Pictures, Inc. (Prelude), executed a release agreement (Release Agreement). Prelude had optioned the rights to the motion picture Lost in Space (New Line Cinema 1998) (Picture). Issues had arisen between Prelude and Melchior regarding the rights to the Picture. The Release Agreement resolved these issues. Under the Release Agreement, Prelude was to make certain payments and grant certain privileges to Melchior. In exchange, Melchior gave up certain rights.

Specifically, Prelude agreed to pay Melchior $500 for entering into the Release Agreement. In addition, the Release Agreement provided that “[i]f the Picture gets made in association with Prelude, Prelude [granted to Melchior] ... the right to receive seventy-five thousand dollars ($75,000) as a production bonus payable out of the budget of the Picture . . . and two percent (2%) of Prelude’s gross receipts, if any, from the Picture (it being understood that such gross receipts are not the gross profits or receipts of the Picture or the distributor’s gross but are Prelude’s gross receipts from the Picture, including, without limitations, receipts from videocassettes, laser-discs and other visual reproductions of the Picture . . .).” 2

The Release Agreement further provided that “[i]f the Picture gets made in association with Prelude, Prelude shall grant to Melchior a non-exclusive ‘special advisor to Mark Koch’ or equivalent credit in the end titles of the Picture in a size, style, position and prominence to be determined by *783 Prelude, in its sole and absolute discretion. Subject to Melchior’s availability, Melchior shall be hired, and shall provide services to, Prelude for a period of a minimum of ten weeks during pre-production and/or production of the Picture at a salary of $1,500 per week.” Prelude also would provide Melchior with complimentary passes to the Picture’s premiere and a copy of the Picture on videocassette.

For an additional $500, Melchior released Prelude and others from any liability to him with respect to his work, Space Family Robinson. He granted Prelude the exclusive right to produce a feature length motion picture based on Space Family Robinson. Melchior also waived any rights he may have had under Civil Code section 1542. Further, without Prelude’s consent, Melchior could not disclose the existence or terms of the Release Agreement.

The Release Agreement provided that no amendment or modification of the agreement would be valid unless in writing and signed by both parties. It provided that it “may be assigned or otherwise disposed of, or transferred by, [Prelude] and such assignee, disposee, or other transferee shall be bound by the terms of this agreement.”

About August 5, 1994, Prelude entered into an agreement (New Line Agreement) with New Line Productions, Inc. (New Line) to sell to New Line Prelude’s “rights to produce a feature-length motion picture . . . based on the television series ‘LOST IN SPACE.’” Specifically, Prelude as seller “assigned] to [New Line as] Buyer all of Seller’s right, title, and interest in and to the Property [the Picture], including, but not limited to, . . . Seller’s right, title and interest pursuant to the release agreement dated June 15, 1994 between Seller and [plaintiff] . . . , a copy of which is attached as Exhibit B hereto. Buyer . . . expressly assume[d] all of Seller’s obligations under the . . . Release Agreement, subject to the retained obligations of Seller with respect to the . . . Release Agreement, as set forth in the final sentence of paragraph 8 hereof.”

The final sentence of paragraph 8 of the New Line Agreement provided “that with respect to the . . . Release Agreement, Seller retains the obligation to make all payments required to be made to lb Melchior pursuant to such agreement: (i) a $75,000 production bonus if the Picture is produced . . . , (ii) 2% of Seller’s gross receipts from the Picture, and (iii) a special advisor fee of $1,500 per week for a minimum of ten weeks during preproduction and/or production of the Picture; provided that Buyer has the right (upon notice to Seller) to make any of the foregoing payments directly to lb Melchior and to offset such payments against monies payable to Seller hereunder.”

*784 The New Line Agreement provided for New Line to pay to Prelude a participation fee, “payable at such time, if ever, as the earlier” of two occurrences. One of these occurrences was “[w]hen domestic box office receipts for the Picture (as reported in Daily Variety) reach” $75 million, at which time a set participation fee would be paid to Prelude. (Emphasis omitted.) The other occurrence was “cash breakeven,” at which time Prelude would be paid 5 percent of 100 percent of adjusted gross receipts.

Prelude did not inform Melchior of the New Line Agreement. Melchior did not agree in writing to the agreement.

New Line produced the Picture, Lost in Space. New Line paid Melchior $90,000: a $75,000 production bonus and $15,000 for services rendered. New Line also included a credit at the end of the picture, identifying Melchior as “Special Advisor to Mark Koch.” Melchior was not paid, by Prelude or by New Line, an additional sum representing what would have been 2 percent of Prelude’s gross receipts from the Picture.

The domestic box office receipts for the Picture, as reported by Daily Variety, never reached $75 million. The picture never reached cash breakeven. As a result, New Line never paid Prelude any participation fee under the New Line Agreement.

Procedural Background

Melchior filed this action against New Line and Prelude for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, constructive fraud, conversion, constructive trust and negligence. A first amended complaint contained the same causes of action. A second amended complaint added Koch and Ilitch/Koch Entertainment as defendants. It contained causes of action for breach of contract, declaratory relief, accounting, constructive trust, fraud and conspiracy, intentional interference with contractual relations, and money had and received.

New Line filed a demurrer to the second amended complaint. The trial court overruled the demurrer as to Melchior’s causes of action for declaratory relief and accounting. It sustained the demurrer with leave to amend as to Melchior’s causes of action for constructive trust, fraud and conspiracy, *785 and intentional interference with contractual relations. It sustained the demurrer without leave to amend as to the cause of action for money had and received. 3

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Bluebook (online)
131 Cal. Rptr. 2d 347, 106 Cal. App. 4th 779, 2003 Cal. Daily Op. Serv. 1855, 2003 Daily Journal DAR 2317, 2003 Cal. App. LEXIS 299, Counsel Stack Legal Research, https://law.counselstack.com/opinion/melchior-v-new-line-productions-inc-calctapp-2003.