Wyler Summit Partnership v. Turner Broadcasting System, Inc.

Opinion by Judge STAGG; Dissent by Judge TASHIMA.

This case concerns a contract dispute between the Wyler Summit Partnership (“Wyler Summit”) and Turner Broadcasting System, Inc., and Turner Entertainment Co. (hereinafter collectively referred to as “Turner”). At issue is the effect of certain provisions of a 1958 contract between film director William Wyler (“Wyler”) and MGM-Loew’s, Inc. (“MGM”) for the direction of the film classic Ben Hur. Wyler Summit, Wyler’s successor in interest to the Ben Hur contract, brought suit against Turner, MGM’s successor in interest, to recover compensation allegedly due thereunder. The district court granted Turner’s motion to dismiss for failure to state a claim upon which relief can be granted. We affirm the district court’s opinion in part, reverse in part, and remand for further proceedings in accordance herewith.

I. BACKGROUND

In 1958, Wyler entered into a written contract with MGM to direct the motion picture Ben Hur. In exchange for his services, MGM agreed to pay Wyler $350,000 plus a “percentage compensation” in the amount of three percent of the film’s gross receipts in excess of $20 million (the “percentage compensation provision”).…

dissenting:

I respectfully dissent.

I do not agree that Wyler Summit has stated a claim for breach of contract based on a waiver theory. Notwithstanding the parties’ clear expression of their contractual intent, the majority allows Wyler Summit unilaterally to rewrite a material term of an unambiguous agreement nearly 40 years after its formation by misapplying the California law on waiver.

Preliminarily, I take issue with the majority’s conclusion that “the district court committed two distinct errors,” first, in misapplying the applicable standard under Rule 12(b)(6) and, second, in “eonduet[ing] the wrong inquiry,” on the “for-whose-benefit” issue. The district court, in fact, did not commit error in either respect and its judgment should be affirmed.

The district court concluded that “[tjhere is nothing in the contract to suggest that the percentage compensation provision was included solely for the benefit of Wyler. In fact, the opposite is true: the provision also benefits defendants by allowing them to limit Wyler’s annual payment.” (Initial emphasis added, remaining emphases in the original.)

The interpretation of a contract is a question of law. HS Servs., Inc. v.…