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Clive Cussler et al v. Crusader Entertainment

December 21, 2012

CLIVE CUSSLER ET AL., PLAINTIFFS AND APPELLANTS,
v.
CRUSADER ENTERTAINMENT, LLC, DEFENDANT AND APPELLANT.



APPEAL from an order of the Superior Court of Los Angeles County, Coleman A. Swart, Judge. (Los Angeles County Super. Ct. No. BC309114)

The opinion of the court was delivered by: Kitching, J.

CERTIFIED FOR PUBLICATION

Affirmed.

Defendant Crusader Entertainment, LLC, now known as Bristol Bay Productions (Crusader) and plaintiffs Clive Cussler and his affiliated entities (Cussler)*fn1 each appeal a postjudgment order. There are three main issues on appeal. The first is whether the trial court abused its discretion by finding there was no prevailing party for purposes of awarding attorney fees. The second is whether the trial court abused its discretion by awarding Cussler 7 percent interest on restitution he recovered pursuant Code of Civil Procedure section 908. This statute provides for restitution of assets collected pursuant to an erroneous judgment subsequently reversed on appeal. Finally, we must determine whether the trial court abused its discretion by awarding Crusader costs of suit. We shall conclude that the trial court did not abuse its discretion and affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Contract

Cussler is the author of a series of novels featuring the character Dirk Pitt. Crusader is a film producer. Cussler and Crusader entered into a Memorandum of Agreement for Option and Purchase of Literary Material dated May 9, 2001. Under the contract, Crusader had an option to purchase from Cussler the film rights to the novel Sahara and a second novel to be designated by Crusader, as well as the right to purchase additional Cussler novels. The contract further provided that, if certain conditions were satisfied, Crusader was obligated to pay Cussler $20 million in seven annual installments for the film rights to Sahara and a second novel.

Before the contract was executed, Cussler approved a screenplay (the Approved Screenplay) for the film Sahara. The contract provided that Crusader would not change the Approved Screenplay "without Cussler's written approval exercisable in his sole and absolute discretion."

The contract also prohibited Cussler from disseminating any news stories or other publicity regarding the subject matter of the contract without Crusader's approval. Additionally, the contract included several indemnification provisions, which Crusader contends provide that the prevailing party in a lawsuit between Crusader and Cussler shall recover attorney fees.

2. The Relationship Between Cussler and Crusader Sours

In November 2001, Crusader exercised its initial option to acquire from Cussler the film rights to Sahara and a second novel. Unfortunately, shortly after Crusader exercised its option, the relationship between the parties soured. Cussler contends Crusader made unacceptable changes to the Approved Screenplay. Crusader contends Cussler unreasonably withheld his approval of changes to the screenplay. Crusader also claims that Cussler breached the contract by making derogatory statements to the press about the film.

In April 2005, the film Sahara was released. It was not a commercial success. Crusader did not make a second Dirk Pitt film.

3. Payments by Crusader to Cussler

Crusader paid Cussler four of the seven annual payments due under the contract for the first two films. These payments were each approximately $2,857,142, for a total of $11,428,571. As we explain post, the parties disputed whether Crusader was obligated to pay Cussler the balance of the $20 million sum stated in the contract, which is $8,571,429.

4. Cussler Commences this Action and Crusader Deposits Two Disputed Installments with the Superior Court

In January 2004, before the film Sahara was released, Cussler commenced this lawsuit against Crusader by filing a complaint in Los Angeles County Superior Court. In November 2005 and October 2006, Crusader made two deposits with the court totaling $5,714,286. These deposits were for the disputed fifth and sixth installments allegedly due under the contract.

5. The Operative Pleadings

Cussler's operative complaint sets forth declaratory relief, breach of contract, and fraud causes of action. The complaint alleged that Crusader breached the contract by, inter alia, defaulting on its obligations due under the contract at the time (the fifth and sixth payments) and by denying any future obligation to pay Cussler sums due under the contract (the seventh payment). Cussler prayed for $100 million in compensatory damages, punitive damages and a declaration that "Crusader no longer has any right or option to acquire any rights in any further Cussler novels and that . . . Crusader has no further rights of any kind" under the contract.

Crusader's operative cross-complaint alleged that Cussler "arbitrarily, irrationally, and destructively pursued his consultation and approval rights" relating to the Sahara screenplay in violation of the implied covenant of good faith and fair dealing. The cross-complaint further alleged that Cussler's disparaging statements about Sahara breached the implied covenant and the express provisions of the contract. In addition, the cross-complaint alleged Cussler fraudulently promised that he would reasonably approve the Sahara screenplay and that Cussler defrauded Crusader by falsely stating that over 100 million copies of his books had been sold.

The cross-complaint set forth causes of action for breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, breach of contract by disparagement, trade libel, fraud, intentional interference with contract or prospective economic advantage, declaratory relief, fraud in the inducement, fraudulent concealment, and negligent misrepresentation.*fn2 Crusader sought compensatory damages in the amount of $65 million, punitive damages, and a declaration that it was relieved of any obligation under the contract to make any payment for the rights to a second picture.

6. The Trial and Special Verdict

In the Spring of 2007, the superior court conducted a 14-week trial. Much of the trial concerned Cussler's alleged unreasonable behavior during the production of Sahara. Crusader argued to the jury that it was entitled to recover millions of dollars of damages as a result of Cussler's alleged breach of the implied and express provisions of the contract. Likewise, Cussler sought to recover millions of dollars of damages as a result of Crusader's alleged breach of contract, including $8,571,429 for the fifth, sixth and seventh installments allegedly due under the contract.

On May 15, 2007, the jury returned a special verdict. The jury found that both Crusader and Cussler breached the contract, but also found that neither party sustained any damages. The jury thus effectively rejected Cussler's and Crusader's breach of contract causes of action. It also rejected the fraud claims asserted by both sides. The jury, however, further found that Cussler breached the implied covenant of good faith and fair dealing and, as a proximate result, Crusader incurred $5 million in damages.

Additionally, the jury answered "No" to Question No. 57, which provided: "Did principal photography of the film 'Sahara' commence on or before November 6, 2003, within the meaning of the parties' agreement?" This question related to Cussler's declaratory relief claim that Crusader no longer had the option to purchase Cussler novels under the contract. The contract provided that if Crusader did not commence the "principal photography" of Sahara within 24 months of its exercise of the initial option, i.e., on or before November 6, 2003, Cussler could terminate Crusader's option to purchase the third novel.*fn3

Finally, the jury answered "Yes" to Question No. 60, which stated: "Based on your decisions on the parties' claims, should Crusader Entertainment be obligated to pay Cussler for the 'second picture' under the parties['] agreement?" The trial court considered this question "advisory" in nature.

7. Post-Trial Proceedings and Judgment

In July 2007, Crusader dismissed its cause of action for declaratory relief with prejudice. As stated ante, Crusader had sought a declaration that it was not obligated to pay Cussler for the rights to a second film.

In July 2007, Cussler filed two motions relating to his claim for $8,571,429. In the first motion, Cussler argued the jury's response to Question No. 60 required the court to enter a judgment in the amount of $8,571,429 in his favor. In the second motion, Cussler requested leave to amend his complaint to conform to proof. Cussler sought to amend his declaratory relief cause of action to seek a declaration that ...


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