Ahern v. Scholz

85 F.3d 774 (1st Cir. 1996)

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Nature of the Case

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Facts

The parties had various dealings with each other in the record business. In early 1976, CBS Records and Ahern Associates, a business name of Ahern and McKenzie, entered into a recording agreement for the exclusive recording services of BOSTON. The group's first album was released in 1976 and sold approximately 11 million copies -- one of the highest-selling debut albums ever. Its second album was released in August 1978 and sold approximately 6 million copies. In 1978, D and the other members of BOSTON entered into a modification agreement with P. The modifications changed the financial relationship between D and his managers. Ahern and McKenzie dissolved their partnership. A few years later, in May of 1981, P and D, individually and under various business names, entered into a further modification agreement, which is at the heart of this dispute. P ceased to be D's manager. Needless to say, in 1982, with a third album for the group 'Boston' not yet completed, CBS records first cut off royalties from the first two albums and then later in 1993 sued both Ahern and Scholz and members of Boston for the failure to timely delivery record albums. While litigation was pending the third album was released by MCA records and sold 4 million copies. At the close of trial, the jury found that D was not in breach of contract. D incurred legal fees of $3.4 million. Then in 1991, Ahern (P) sued Scholz (D) for breach of contract for failure to pay royalties due under the third album. The only claim that went to trial was the parties' respective breach of contract claims. The jury found that D breached section 5.2.1 of the agreement to pay royalties to P and that P had not breached the agreement from the first and second albums to pay D royalties due from them. P got an award of $547,007 in damages. The trial court sitting without a jury found that D had breached the agreement. After a hearing on P’s bill of costs and application for reasonable attorney fees, the court awarded P $265,000 in attorney fees and $135,000 in costs. D moved for a new trial under Rule 59(a). That was denied, and D appealed.