Wyler Summit Partnership v. Turner Broadcasting System, Inc.

135 F.3d 658 (9th Cir. 1998)

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Nature of the Case

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Facts

In 1958, Wyler entered into a written contract with MGM to direct the motion picture, Ben Hur. 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 contract further provided that this 'percentage compensation' shall be payable 'in annual installments not to exceed the sum of $50,000 in any one year.' Ben Hur has generated in excess of $3.3 million in total 'percentage compensation' for Wyler and his heirs. Wyler and his heirs have already been paid $1.8 million, and D retains another $1.5 million in deferred 'percentage compensation' payable to Wyler's heirs. Wyler died in 1981 at which time his children became his successors in interest to the Ben Hur contract. Wyler's heirs have conveyed their interest in the Ben Hur contract to D, a California partnership composed solely of Wyler's heirs. P filed suit against D seeking a reformation of the Ben Hur contract deleting the installment payment provision, declaratory relief determining the parties' respective rights and obligations thereunder, and a book accounting. P claims that D is enjoying an unbargained windfall and seeks compensation for unjust enrichment, breach of fiduciary duty, and breach of implied duty of good faith and fair dealing. P alleged that D is earning, and will continue to earn, a significant amount of interest income on the approximately $1.5 million in deferred 'percentage compensation' held by it; that the original parties to the contract never contemplated that the $50,000 annual installment payment provision - which was inserted solely at Wyler's request to avoid income tax liability. D has, of course, rejected P’s proposal to waive the clause in the contract. D filed a motion to dismiss pursuant to Rule 12 (b) (6). The court granted D’s motion. It held that P could not waive the installment payment provision because (1) the Ben Hur contract did not contain a clause authorizing such a waiver and (2) the provision at issue benefits Das well as P. P appealed.