Business Law Chapter 10 Homework Wagners With Percent Share Sgps Income From

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206

Chapter 10

Nature and

Terminology

Case 10.1

N.C.App.,2010.

Scheerer v. Fisher

688 S.E.2d 472

Court of Appeals of North Carolina.

David SCHEERER, individually, and Mountain Life Realty, LLC, Plaintiffs-Appellants

12.

Brokerage.

Seller agrees to pay commissions of two percent (2%) of the Purchase Price ... to … David Schear [sic], and shall

deliver to Purchaser at Closing signed receipts from each of the foregoing parties acknowledging its receipt of payment in full of

all commissions, brokerage fees, or similar fees of whatever nature and kind arising out of the transactions contemplated herein.

Seller and Purchaser represent and warrant each to the other that they have not retained any other brokers in connection with

this transaction. Either party guilty of a breach of this representation and warranty shall indemnify the other party for any claims,

wood County Registry. Fisher did not pay plaintiffs any commission for their role in procuring the properties for defendants.

On 4 January 2008, plaintiffs filed a complaint in Haywood County District Court. The case was subsequently transferred to Hay-

wood County Superior Court. Plaintiffs then filed a voluntary dismissal against several original defendants and filed an amended

complaint that added Renaissance Ventures as a defendant. The result of these filings was that plaintiffs’ ultimate action was sole-

ly against Fisher, Highland Partners, and Renaissance Ventures (collectively “defendants”). Plaintiffs alleged breach of an express

Dismissal under Rule 12(b)(6) is proper when one of the following three conditions is satisfied: (1) the complaint on its face re-

veals that no law supports the plaintiff’s claim; (2) the complaint on its face reveals the absence of facts sufficient to make a

good claim; or (3) the complaint discloses some fact that necessarily defeats the plaintiff’s claim.

Wood v. Guilford Cty.,

355 N.C. 161, 166, 558 S.E.2d 490, 494 (2002) (internal citation omitted). The standard of review on an

appeal of a grant of a motion to dismiss is

de novo. Burgin,

181 N.C.App. at 512, 640 S.E.2d at 429.

Glosson,

182 N.C.App. 229, 239, 641 S.E.2d 735, 741 (2007) (Tyson, J., dissenting);

Burgin,

181 N.C.App. at 517, 640 S.E.2d at

431 (Tyson, J., dissenting). An agreement to compensate an agent or broker for services in the buying or selling of real estate

need not be in writing.

Palmer v. Lowder,

167 N.C. 331, 83 S.E. 464 (1914);

Lamb v. Baxter,

130 N.C. 67, 40 S.E. 850 (1902);

Ab-

bott v. Hunt,

129 N.C. 403, 40 S.E. 119 (1901); W.W. Allen, Annotation,

Brokerage or Agency Contract Concerning Real Property

as Within Statute of Frauds,

151 A.L.R. 648 (1944).

agreement for brokerage services between a broker and an owner of the property to be the subject of a transaction must be in

writing and signed by the parties from the time of its formation. Every agreement for brokerage services between a broker and a

buyer or tenant shall be express and shall be reduced to writing and signed by the parties thereto not later than the time one of

the parties makes an offer to purchase, sell, rent, lease, or exchange real estate to another. However, every agreement between

a broker and a buyer or tenant which seeks to bind the buyer or tenant for a period of time or to restrict the buyer’s or tenant’s

Id.

at 581-82 (internal citations omitted).

See also Allen v. Seay,

Moreover, when under an existing contract of agency to sell land in which no stipulation is made for compensation the broker

has … produced a purchaser who is ready, willing and able to buy the land, the rule seems to be that the broker is entitled to re-

cover the reasonable value of his services.

White v. Pleasants,

225 N.C. 760, 763, 36 S.E.2d 227, 229 (1945).

[9] In the instant case, as to their claim for

quantum meruit,

plaintiffs alleged that: (1) defendants had a prior professional relation-

(2) defendants knowingly and voluntarily accepted the services; (3) plaintiffs did not perform these services gratuitously; (4) de-

fendants were ready, willing and able buyers and in fact closed on the properties after rescinding the first contract and arranging

FN3. We note that defendants again urge us to find that (1) plaintiffs violated N.C. Admin. Code tit. 21, r. 58A.0104(a) and

210 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW

(2) the violation would force us to dismiss plaintiffs’

quantum meruit

claim due to public policy concerns. N.C. Admin.

Code tit. 21, r. 58A.0104(a), by its terms, does not require a written contract prior to “the time one of the parties makes an

offer to purchase.” Because plaintiffs’

quantum meruit

claim involves services rendered prior to any offer to purchase, we

Case 10.2

146 Cal.App.4th 586, 52 Cal.Rptr.3d 898, 07 Cal. Daily Op. Serv. 235, 2007 Daily Journal D.A.R.

343

Robert WAGNER, etc., Plaintiff and Appellant,

COLUMBIA PICTURES INDUSTRIES, INC., Defendant and Respondent.

argument. If we have erred in our resolution of the issues it was not for counsels’ lack of effort to set us straight.

FACTS AND PROCEEDINGS BELOW

Robert Wagner and Natalie Wood (the “Wagners”) entered into an agreement with Spelling–Goldberg Productions (SGP) “relating

to Charlie’s Angels (herein called the ‘series’).” The contract entitled the Wagners to 50 percent of the net profits SGP received as

consideration “for the right to exhibit photoplays of the series and from the exploitation of all ancillary, music and subsidiary rights

that motion the parties stipulated to entry of judgment in favor of Columbia on the ground the order granting the motion as to the

breach of contract cause of action effectively disposed of the remaining causes of action.

CHAPTER 10: NATURE AND TERMINOLOGY 211

*589 DISCUSSION

I. SCOPE OF REVIEW.

connection therewith.” The principal dispute between the parties is whether the phrase “in connection therewith” modifies “Char-

lie’s Angels television series,” so the net profits SGP, or Columbia, received from any ancillary or subsidiary right which bears a

“connection” to the television series are included within the agreement (Wagner) or whether the phrase “in connection therewith”

modifies “the right to exhibit photoplays of the series” so only the net profits SGP, or Columbia, received by taking advantage of

SGP’s rights, as producer, to exhibit photoplays of the series are included in the agreement (Columbia).

1. The antecedent “Love Song” agreement.

Wagner introduced evidence of the history of the negotiations underlying the Charlie’s Angels contract in support of his interpreta-

tion of the agreement.

Parol evidence of the negotiations underlying a contract is admissible to explain but not contradict the meaning of its

terms.

2. The Charlie’s Angels agreement.

Another provision of the “Love Song” agreement stated the Wagners would team up with SGP “to jointly submit up to five ideas to

ABC for the basis of a pilot script for the 1974–1975 television season.” The parties agreed if ABC accepted any of these ideas

they would “enter into a business relationship … where the profits therefrom are shared equally between the parties.” One of the

ideas the Wagners and SGP submitted to ABC was a series called “Harry’s Angels.”

sources

and it is my opinion that the agreement so states this.” The Charlie’s Angels agreement was based on the “Love Song”

agreement and defines net profits in identical language. Therefore, the Charlie’s Angels agreement should also be interpreted as

providing the Wagners with a 50 percent share in SGP’s income “from all sources” without limitation as to source or time. Since

Columbia admits it stands in SGP’s shoes with respect to SGP’s obligations under the Charlie’s Angels agreement, Columbia is

obligated to pay Wagner and the trusts 50 percent of the net profits derived from the Charlie’s Angels movies.

connection therewith.” For a right to be “subsidiary” or “ancillary,” meaning supplementary or subordinate, there must be a primary

right to which it relates. The only primary right mentioned in the contract is “the right to exhibit photoplays of the series.” Thus the

Wagners were entitled to share in the profits from the exploitation of the movie rights to Charlie’s *593 Angels if those rights were

exploited by Columbia as ancillary or subsidiary rights of its primary “right to exhibit photoplays of the series” but not if those rights

were acquired by Columbia independently from its right to exhibit photoplays.

ANGELS BY EXPLOITING ITS RIGHTS AS PRODUCER OF THE TV SERIES.

To understand how the producer of a television series acquires the motion picture rights in the series it is necessary to understand

the concepts of “works made for hire” under the Copyright Act of 1909 and “separated rights” under the 1970 Writers Guild of

America Minimum Basic Agreement (MBA).

Former 17 United States Code sections 1-216 (35 Stat. 1075, as amended). Congress enacted a comprehensive revi-

sion to the 1909 Act in the Copyright Act of 1976 () which became effective on January 1, 1978. The citations in this

opinion are to the 1909 Act which was in effect at all times relevant to this opinion. The text of the 1909 Act as amended

is set out in 8 Nimmer on Copyright (2006) Appendix 6.

The Writers Guild is the collective bargaining unit of screen and television writers which for decades has negotiated an in-

dustry-wide collective bargaining agreement (the MBA) with motion picture and television producers governing the rights

of its members. (Reiner, “ hereafter Reiner.) It is undisputed the 1970 MBA applied to the contract between SGP and the

writers of the Charlie’s Angels pilot production, Goff and Roberts.

A. Works Made For Hire

The 1909 Act provided the holder of the copyright in a work had “the exclusive right … to … make any other version thereof[.] It

further provided “the word ‘author’ shall include an employer in the case of works *594 made for hire.” Thus, unless the parties

agreed otherwise a writer’s employer owned all of the rights comprised in the copyright, including the right to use a work created

for one medium in another medium. It was not uncommon, however, for the parties to agree to a provision reserving to the em-

ployee writer the rights in certain media while the employer producer retained the rights in other media.

Former 17 United States Code section 1, subdivision (b).

Former 17 United States Code section 26.

214 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW

material,” in other words it had “the right to exhibit photoplays of the series.” SGP also held in trust for Goff and Roberts the sepa-

rated right to generate motion pictures based on the series.

However, as we discuss below, there is no evidence SGP ever acquired the motion picture rights to Charlie’s Angels by exercising

its right of first refusal or in any other way connected to its right to exhibit photoplays of the series.

*596 C. SGP Did Not Acquire the Motion Picture Rights to Charlie’s Angeles by Exercising a Right Connected To Its Right to Ex-

hibit Photoplays Of the Series.

Columbia produced sufficient evidence to make a prima facie showing SGP never acquired the motion picture rights from Goff and

Roberts. This evidence included the contract under which Columbia purportedly purchased from the heirs of Goff and Roberts

“the right to create and produce motion pictures … based upon the television series created by Ben Roberts and Ivan Goff entitled

‘Charlie’s Angels.’ ” In addition, Columbia submitted the deposition testimony of Marvin Katz and the declaration of Gregory

Boone. Katz, a former senior executive of SGP, testified it was his understanding SGP never acquired Goff’s and Roberts’ re-

served rights in Charlie’s Angels. Boone, an executive with Sony Pictures Television, testified that in the early 1990’s he was

asked to look into the issue of who owned the motion picture rights to the Charlie’s Angels television series. Boone conducted a

search of the business records of SGP which Columbia obtained after it purchased SGP’s assets and “did not locate any evidence

in SGP’s business records to suggest that SGP owned the theatrical motion picture rights for ‘Charlie’s Angels.’ ”

The reasonable inference from this evidence is that SGP did not acquire the motion picture rights to Charlie’s Angels before it sold

its assets to Columbia in 1982, more than six years after Goff and Roberts wrote the pilot episode. This inference, of course, may

be rebutted “by other inferences or evidence, which raise a triable issue as to any material fact.” The record contains no such

inferences or evidence.

Case 10.3

Tenn.,2009.

U.S. Bank, N.A. v. Tennessee Farmers Mut. Ins. Co.

— S.W.3d —-, 2009 WL 199856 (Tenn.)

Supreme Court of Tennessee,

at Jackson.

U.S. BANK, N.A., as servicer for the Tennessee Housing Development Agency

*1 The issue presented in this case is whether the commencement of foreclosure proceedings constitutes an increase in hazard for

notice purposes under a standard mortgage clause in an insurance policy. The parties to this dispute are the bank that loaned

funds to a homeowner for the purchase of a house and the insurance company that issued a personal fire and extended coverage

insurance policy on the premises. After the homeowner became delinquent on her payments, the bank began foreclosure proceed-

ings by notifying the homeowner of its intent to foreclose on the house. No notification of the foreclosure was given to the insur-

ance company which insured the house against fire loss. Before the foreclosure process was complete, the homeowner filed for

bankruptcy, which stayed the foreclosure proceedings. Thereafter, the house was destroyed by fire. The insurance company re-

fused to pay the insurance proceeds to the bank on the theory that the commencement of foreclosure proceedings constituted an

This appeal arises out of a dispute between U.S. Bank, N.A. (“Bank”), and Tennessee Farmers Mutual Insurance Company (“Ten-

nessee Farmers”), regarding insurance coverage on a residence which burned while insured against fire loss by Tennessee Farm-

ers. The Bank had a mortgage on the property and had taken steps to foreclose on the property before the fire loss. The parties’

dispute centers on whether the Bank was required to give notice, pursuant to the terms of the policy, to Tennessee Farmers of the

commencement of foreclosure proceedings for coverage of the fire loss.

2002. On October 1, 2002, the homeowner and her husband filed for bankruptcy, which automatically stayed the foreclosure pro-

cess.

At no point did the Bank notify Tennessee Farmers of the foreclosure proceedings. On April 12, 2003-eight months after the Bank

notified the homeowner that foreclosure proceedings were underway and over six months after the foreclosure was stayed by the

bankruptcy filing-the insured residence was destroyed by a fire apparently caused by methamphetamine production.FN1

the Bank’s coverage under the policy. Tennessee Farmers also sought summary judgment on the Bank’s bad faith and consumer

protection claims.

The trial court denied Tennessee Farmers’ motion for summary judgment and granted the Bank’s motion for partial summary

judgment, concluding that the Bank’s failure to give the insurer notice of the foreclosure proceedings did not invalidate the insur-

ance coverage. The trial court’s order was certified as a final judgment pursuant to Rule 54.02 of the Tennessee Rules of Civil Pro-

II.

Analysis

*3 [1][2] In our review of this case, we are guided by several well-established principles. First, issues relating to the scope of insur-

ance coverage present questions of law.

Standard Fire Ins. Co. v. Chester-O’Donley & Assocs., Inc.,

972 S.W.2d 1, 6

(Tenn.Ct.App.1998). Questions regarding the interpretation of a statute and the statute’s application to undisputed facts involve

issues of law.

Waldschmidt v. Reassure Am. Life Ins. Co.,

271 S.W.3d 173, 175 (Tenn.2008). The present appeal involves the

forced as written.

Standard Fire Ins. Co.,

972 S.W.2d at 7. Absent fraud or mistake, the terms of a contract should be given their

plain and ordinary meaning, for the primary rule of contract interpretation is to ascertain and give effect to the intent of the parties.

Christenberry v. Tipton,

160 S.W.3d 487, 494 (Tenn.2005).

We first review the terms of the insurance policy and then the applicable statutory provisions to determine whether notice to Ten-

nessee Farmers was required for coverage.

(Fla.Dist.Ct.App.1987);

Hunt,

488 S.E.2d at 341.Consequently, if the insured borrower does something to invalidate the policy,

such as commit fraud or intentionally damage the property, the lienholder has no rights under the policy.

See Cent. Nat’l Ins. Co. of

Omaha v. Mfrs. Acceptance Corp.,

544 S.W.2d 362, 364 (Tenn.1976) (observing that acts of the insured which invalidate the policy

defeat the loss payee’s rights along with the rights of the insured). Under a simple/open clause, the acts of the insured borrower

are highly relevant, as those acts directly affect the rights of both borrower and lienholder. Clauses of this type have been in use in

Cir.1985);