Carolco Television Inc. v. National Broadcasting Co. (In re De Laurentiis Entertainment Group Inc.)

OVERVIEW

De Laurentiis Entertainment Group (“DEG”) contracted through an intermediary to purchase advertising from National Broadcasting Co. (“NBC”). DEG filed for *1271 bankruptcy under Chapter 11 without having paid for this advertising. DEG was reorganized through a series of steps into Carolco Television, Inc. (“CTI”), which emerged from bankruptcy. When CTI sued NBC on a pre-bankruptcy debt, NBC asserted the advertising debt as a setoff against CTI’s claim. The bankruptcy court granted summary judgment for NBC, concluding that it was entitled to recover the advertising debt from DEG on a quantum meruit theory. It also permitted NBC to set off this debt against CTI. The district court affirmed. We affirm as well.

FACTUAL AND PROCEDURAL BACKGROUND

DEG made movies. It contracted with an advertising agency (“BBDO”) to place advertising for various movies in different media markets. BBDO purchased $1.6 million in television advertising from NBC on DEG’s behalf. DEG knew and approved of this purchase, but was not directly a party to the purchase contract. NBC billed BBDO, which in turn billed DEG for all its advertising accounts on a separate invoice. Neither DEG nor BBDO had…