Gilkyson v. Disney Enterprises, Inc. ( 2021 )

Filed 7/21/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
ELIZA GILKYSON et al., B300971
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. EC061586)
v.
DISNEY ENTERPRISES, INC.,
et al.,
Defendants and Appellants.
APPEALS from a judgment of the Superior Court of
Los Angeles County, William D. Stewart, Judge. Reversed with
directions.
Hunter Salcido & Toms, John L. Hunter; Law Office of
Craig Barker and Craig Barker for Plaintiffs and Appellants
Eliza Gilkyson, Tony Gilkyson and Nancy Gilkyson.
Sidley Austin, Rollin A. Ransom, David R. Carpenter and
Sheri Porth Rockwell for Defendants and Appellants Disney
Enterprises, Inc. and Wonderland Music Company, Inc.
___________________
A jury awarded Eliza Gilkyson, Tony Gilkyson and Nancy
Gilkyson, the adult children and heirs of songwriter Terry
Gilkyson, $350,000 based on its finding that Disney Enterprises,
Inc. and its music publishing subsidiary, Wonderland Music
Company, Inc., (collectively Disney) had failed to pay
contractually required royalties in connection with certain
limited uses of “The Bare Necessities” and several other
Gilkyson-composed songs in home entertainment releases of Walt
Disney Productions’s 1967 animated film The Jungle Book.
Following the jury’s verdict the trial court, ruling on the Gilkyson
heirs’ cause of action for declaratory relief, awarded an additional
$699,316.40 as damages for the period subsequent to the jury’s
verdict through the duration of the songs’ copyrights.
On appeal Disney contends it was entitled as a matter of
law to judgment in its favor because its agreements with
Gilkyson require payment of royalties only in an amount equal to
50 percent of net sums received by Wonderland for exploitation of
the mechanical rights to the material Gilkyson composed and no
such sums were received for the home entertainment releases of
The Jungle Book after July 2009. Alternatively, Disney argues
the trial court erred in awarding contract-based damages as part
of the declaratory relief cause of action.
In a cross-appeal the Gilkyson heirs argue the trial court
erred in denying their request for prejudgment interest. They
also conditionally appeal the trial court’s denial of their motion
for a new trial on damages alone and for additur, in which they
had argued the amounts awarded by the jury and the trial court
were inadequate and not supported by substantial evidence.
However, explaining they are prepared to accept the judgment as
entered (plus prejudgment interest) to put an end to the
2
litigation, the Gilkyson heirs ask us to reverse the ruling on their
new trial motion only if we reverse the damage award on their
declaratory relief cause of action.
We agree with Disney that interpretation of its agreements
with Gilkyson is subject to de novo review; Gilkyson’s right to
receive royalties from exploitation of the mechanical reproduction
rights in “The Bare Necessities” and other songs he wrote for The
Jungle Book was dependent on Wonderland receiving payment
for such exploitation; and the express language of the contracts
granted Disney sole discretion to decide how to exploit the
material, including whether a fee should be charged for Disney’s
own use of the material in home entertainment releases.
Accordingly, we reverse the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Songwriting Agreements
Walt Disney Productions, Disney Enterprises’s predecessor-
in-interest, commissioned Gilkyson in 1963 to write songs for
potential use in its anticipated animated motion picture The
Jungle Book. The parties entered into a series of single-song
contracts that are identical except for the names of the songs and
the dates. Only “The Bare Necessities” was actually used in the
1
motion picture, which was first released in theatres in 1967.
However, demo recordings made by Gilkyson of six other songs
1
As we recounted in Gilkyson v. Disney Enterprises, Inc.
(2016) 244 Cal.App.4th 1336, 1338, footnote 1, in 1968 Gilkyson
received an Academy Award nomination for best original song for
“The Bare Necessities” and a Grammy Award nomination, along
with Richard M. Sherman and Robert B. Sherman, for best
recording for children.
3
(referred to at trial as the deleted songs) were ultimately used
with bonus features in certain of the home entertainment
releases of The Jungle Book.
Each contract provided “the material,” defined as “original
lyrics and/or music (including any and all melodies, lyrics and
music written by you hereunder),” was written as a work for hire,
which meant Walt Disney Productions was the author and owned
all rights. The contracts authorized Walt Disney Productions to
assign the material to its wholly owned subsidiary, Wonderland.
As consideration, Gilkyson received an initial fee of $1,000 and
specified royalties for sales of sheet music and for licensing or
other disposition of the mechanical reproduction rights.
Specifically, paragraph 6 of each agreement provided, “We agree
that in the event any of such material so written by you as a work
made for hire shall be published by us or be licensed by us to be
published in any of the media set forth in Subparagraphs (a), (b)
and (c) below, you shall be entitled to receive (in addition to the
amount mentioned in Paragraph 5 hereof) royalties from the
publication of such material, as hereinbelow set forth: [¶]
(a) Five cents (5¢) for each regular piano copy and/or
orchestration that is sold and paid for at wholesale in the United
States of America and Canada; [¶] (b) An amount of money
equal to Fifty Percent (50%) of all net sums received by our music
publisher in respect of regular piano copies and orchestrations
sold and paid for in any foreign country other than Canada; [and]
[¶] (c) An amount of money equal to Fifty Percent (50%) of the
net amount received by our music publisher on account of
licensing or other disposition of the mechanical reproduction
rights in and to material so written by you.”
4
Paragraph 7 of the agreements described the limited
nature of Gilkyson’s royalty rights: “You shall be entitled to
receive as royalties only the moneys and/or royalties stipulated in
and in accordance with Paragraph 6 above; specifically excepting,
excluding and reserving to us all revenue, emoluments and/or
receipts received by and paid to us by virtue of the exercise of the
grand rights, dramatic rights, television rights and other
performance rights, including the use of the material in motion
pictures, photoplays, books, merchandising, television, radio and
endeavors of the same or similar nature.”
Paragraph 10 again stated the limited nature of Gilkyson’s
rights and granted Disney sole discretion as to exploitation of the
material: “You shall have no interest in any of the material other
than your right to receive the royalties specifically agreed herein
to be paid to you. Nothing contained in this agreement shall be
construed as obligating us to publish, release, exploit or
otherwise distribute any of the material, and the same shall be
always subject to our sole discretion.”
2. Home Entertainment Release of The Jungle Book
Over the years Wonderland paid Gilkyson and
2
subsequently his heirs a share of royalties based on licensing
“The Bare Necessities” for soundtracks, album and single-song
sales in media that included phonograph records, audiocassette
tapes, compact discs and audio-file digital downloads and
streaming. However, Disney paid no royalties when, beginning
in 1991, The Jungle Book was first released in a home
videocassette (VHS) format or thereafter when it was released on
2
Gilkyson died in 1999.
5
LaserDisc, DVD, Blu-ray or other digital video formats for home
entertainment use.
3. The Gilkyson Heirs’ Lawsuit and the First Appeal
In 2013 the Gilkyson heirs sued Disney alleging Disney had
breached its contractual obligation to pay the Gilkyson heirs per-
unit royalties in connection with the use of Gilkyson’s songs in
the DVD version of The Jungle Book released in 2007 and on
3
VHS tapes, which had been released at an earlier date.
Disney demurred to the complaint. While insisting its
contractual obligation to pay mechanical reproduction royalties
excluded use of Gilkyson’s songs in any audiovisual medium, for
purposes of its demurrer it confined its arguments to claiming the
Gilkyson heirs’ causes of action were time-barred under the
applicable statutes of limitations. In particular, emphasizing the
allegation the DVDs had been released in 2007, Disney argued
the Gilkyson heirs’ claim for breach of written contract accrued
no later than 2007, thus making the claim, first filed in 2013,
untimely under the governing four-year statute of limitations. In
addition, the release of VHS tapes had occurred decades prior to
2007. Accordingly, Disney argued any claim for failure to pay
royalties accrued at the first breach of contract in the 1990’s,
leaving all claims time-barred.
3
The lawsuit was originally filed in Texas on July 15, 2013.
After Disney challenged the court’s jurisdiction, the parties
agreed the Gilkyson heirs would dismiss the Texas lawsuit and
refile in California with any limitations period relating back to
the July 15, 2013 filing date. Disney also agreed to identify the
responsible corporate parties, and the Gilkyson heirs agreed to
dismiss other corporate entities.
6
The trial court sustained Disney’s demurrer, observing the
claim for royalties began to accrue in 1991 when the VHS tapes of
The Jungle Book were originally released and, at the latest, by
December 31, 2007 when the DVDs were released. Under either
scenario, the court ruled, the Gilkyson heirs’ claims were barred
by the four-year statute of limitations for written contracts. The
court granted the Gilkyson heirs leave to amend.
On April 30, 2014 the Gilkyson heirs filed a first amended
complaint asserting claims for breach of contract, breach of the
implied covenant of good faith and fair dealing and declaratory
relief. The amended complaint contained similar allegations as
the original complaint but added that Disney had released
The Jungle Book 2 in 2008 and re-released The Jungle Book (a
Diamond Edition) on Blu-ray format, digital download format
and DVD in 2014. Specifically, with respect to the 2007 DVD the
Gilkyson heirs alleged they were entitled to royalties for the use
of “The Bare Necessities” in the film itself, the instrumental
versions of “The Bare Necessities” that played when navigation
menus were displayed, and a bonus feature in which the demo
recordings of the Gilkyson-composed deleted songs played. As to
the 2014 release, the Gilkyson heirs again alleged they were
entitled to royalties for the use of “The Bare Necessities” in the
motion picture and for use of music in certain bonus features,
including a “Bear-E-Oke sing-along” that displayed the lyrics of
“The Bare Necessity” over a clip of the motion picture in which
the characters sing the song. The breach of contract allegations
omitted any reference to the 1991 release of The Jungle Book in
VHS format.
The cause of action for breach of the implied covenant of
good faith and fair dealing, which had not been included in the
7
original complaint, was based on essentially identical allegations.
The cause of action for declaratory relief requested a
determination that the Gilkyson heirs were entitled to royalties
in connection with sales of The Jungle Book and Gilkyson-
composed songs on DVD, Blu-ray and via digital download or any
similar medium.
The trial court again sustained Disney’s demurrer, this
time without leave to amend, and dismissed the lawsuit. The
court ruled omission of allegations relating to the release of the
film in VHS format created a sham pleading intended to avoid
the limitations bar. In any event, the Gilkyson heirs’ claims
accrued no later than 2007 with the first release of DVDs; and
thus their claim for royalties, filed well after the expiration of the
four-year statute of limitations applicable to written contracts,
was time-barred. With respect to the cause of action for breach of
the implied covenant of good faith and fair dealing, the trial court
sustained Disney’s demurrer not only on the ground the claim
was duplicative of the breach of contract claim and barred by the
statute of limitations, but also on the ground its order granting
leave to amend after Disney’s demurrer to the original complaint
was sustained did not permit the Gilkyson heirs to add a new
cause of action.
We reversed the judgment of dismissal, holding the
continuous accrual doctrine applied to the Gilkyson heirs’
contract claims. (Gilkyson v. Disney Enterprises, Inc. (2016)
244 Cal.App.4th 1336, 1342 (Gilkyson I).) “Disney’s obligation to
pay royalties based on its licensing or other disposition of the
mechanical reproduction rights to Gilkyson’s songs was
unquestionably a continuing one. . . . The result is that, while
portions of the Gilkyson heirs’ contract claim are undoubtedly
8
time-barred, the action is timely as to those breaches occurring
within the four-year limitations period preceding the filing of the
4
original lawsuit.” (Id. at p. 1343, fn. omitted.) We declined to
reverse the order sustaining the demurrer to the cause of action
for breach of the implied covenant of good faith and fair dealing,
however, explaining, “[T]he Gilkyson heirs provide no argument
on appeal to challenge that alternate justification for sustaining
the demurrer to this cause of action.” (Id. at p. 1347.) We left it
for the trial court to decide whether to grant leave to the
Gilkyson heirs to add that cause of action if it was requested
following remand. (Ibid.)
4. The Gilkyson Heirs’ Motion for Leave To File a Second
Amended Complaint
Our remittitur issued on June 2, 2016. The Gilkyson heirs
moved for leave to file a second amended complaint, which would
have expanded their contract claim to include Gilkyson-composed
songs for films other than The Jungle Book and alleged a new
cause of action for breach of the covenant of good faith and fair
dealing, a year later, on June 20, 2017. The trial court denied the
motion, citing the Gilkyson heirs’ unwarranted delay, Disney’s
4
In reversing the judgment in favor of Disney we observed,
“Whether that continuing obligation was breached by Disney’s
failure to pay royalties based on the use of Gilkyson’s songs in
DVDs and similar home entertainment or audiovisual media, as
the Gilkyson heirs allege, is not the question presented in this
appeal.” (Gilkyson I, supra, 244 Cal.App.4th at p. 1343, fn. 4.)
We also observed the contract language at issue “may ultimately
require extrinsic evidence to determine its scope.” (Id. at
p. 1345.)
9
pending summary judgment motion and the approaching trial
date.
5. Disney’s Motion for Summary Judgment
As the trial court noted, the month before the Gilkyson
heirs’ motion for leave to amend, Disney had moved for summary
judgment. Disney’s motion was principally premised on its
position that, in 1963 when the Gilkyson contracts were executed,
as well as currently, “the term ‘mechanical reproduction’ refers to
audio-only uses and not to audiovisual uses such as in motion
picture or other uses involving sound and images, whether on
film or on digital formats such as DVDs.” Based on that
definition, Disney advanced two related arguments: “1. The
complained of uses are on audiovisual media—media on which
both sounds and visual representations are fixed—and therefore,
are not mechanical reproductions that bear royalties; [¶] 2. The
complained of uses constitute audiovisual works, and therefore,
are not mechanical reproductions that bear royalties.”
Disney also asserted it was entitled to summary judgment
on a third ground: “3. Royalties for mechanical reproductions
are owed only when Disney’s music publisher, Wonderland Music
Company, Inc. (‘Wonderland’), receives money on account of
licensing or other disposition of the mechanical reproduction
rights. Because the complained-of uses on home entertainment
products are not mechanical reproductions, Wonderland has
never received any money for such uses, and therefore no
royalties are due Plaintiffs.” Describing this ground in its
supporting memorandum as “a separate, independent reason” for
summary judgment, Disney explained, “For example, although
Wonderland is paid for digital downloads of the movie soundtrack
and other audio-only uses, it is not paid for digital downloads of
10
the motion picture or other audiovisual reproductions, regardless
of the format in which they may be distributed. [Citation.] [¶]
Because no amounts have been paid to Wonderland for the uses
5
at issue, no royalties are due to Plaintiffs for those uses.”
5
In her original declaration in support of the motion for
summary judgment, Stacey Green, vice-president of finance for
Disney Music Group, stated, “Licenses to exploit the mechanical
reproduction rights to a composition, which give a user
permission to use a composition in an audio-only format like a
record album or CD, are distinct from what are commonly
referred to as ‘synchronization’ or ‘synch’ licenses, which may be
issued when a composition is used in audiovisual format (e.g., use
of the composition in a third-party television commercial).
However, when a composition is written for use in connection
with a particular motion picture (as in the case of the Jungle
Book Songs), Wonderland does not issue a synch license or collect
a license fee for use of that composition in that motion picture or
related motion pictures (e.g., sequels), or for bonus features that
may appear on home entertainment releases of such motion
pictures. Accordingly, Wonderland has not received synch fees
when the Jungle Book Songs have been used in The Jungle Book
motion pictures, including without limitation in home
entertainment releases of those motion pictures or in bonus
features included on such home entertainment releases.”
In an amended declaration filed three weeks later
(contemporaneously with a Disney document production), Green
modified the second portion of this paragraph in her declaration
to read, “However, when a composition is written for use in
connection with a particular motion picture (as in the case of the
Jungle Book Songs), since at least July 15, 2009, Wonderland’s
approach has been not to issue a synch license or collect a license
fee for use of that composition in that motion picture or related
motion pictures (e.g., sequels), or for bonus features that may
appear on home entertainment releases of such motion pictures.
11
The Gilkyson heirs disputed Disney’s interpretation of the
scope of their right to royalties for exploitation of mechanical
reproduction rights, contending synchronizing music with a
series of related images in a device capable of playing back the
audiovisual work is properly considered “mechanical
reproduction,” both in general terms (that is, under copyright
Accordingly, since at least that time, Wonderland has not received
synch fees when the Jungle Book Songs have been used in the
The Jungle Book motion pictures, including without limitation in
home entertainment releases of those motion pictures or in bonus
features included on such home entertainment releases.” (Italics
added.)
Green’s original declaration also described the following,
apparent counter-example to her statement regarding synch
licenses: “In 2007, Walt Disney Music Company was paid a fee to
permit use of a version of ‘The Bare Necessities’ with revised
lyrics in connection with a game included as a bonus feature on a
home entertainment release of The Jungle Book motion picture.
Although denominated a synchronization use license agreement,
the fee was actually charged because the lyrics were rewritten,
rather than for any synchronization license.” Her amended
declaration added the following language to this paragraph, “In
addition, I understand that in or around 2003, Wonderland
granted Walt Disney Television Animation a synch and
performance license for use of ‘The Bare Necessities’ in
connection with ‘The Jungle Book 2,’ a sequel to The Jungle Book
motion picture, although such a license is not in keeping with
Wonderland’s approach as described in paragraph 7 above. In
any event, based on my review, since at least July 15, 2009,
neither Wonderland nor Walt Disney Music Company has had
occasion to issue a synch license or collect a synch license fee in
connection with The Jungle Book-related home entertainment
releases that include any of the Jungle Book Songs.”
12
law) and for purposes of the Gilkyson contracts—that is, that
synchronization (“synch”) rights are a subset of mechanical
reproduction rights. Alternatively, the Gilkyson heirs argued,
even if mechanical rights are limited to audio-only uses, certain
of Disney’s uses of the songs fell within that more restricted
definition because they played over static images in navigation
menus and underneath a series of storyboards in bonus features.
At the very least, they insisted, the dispute over the proper
interpretation of the term presented a triable issue of material
fact.
As to Disney’s contention mechanical reproduction royalties
are due only if Wonderland has received a payment, the Gilkyson
heirs argued it would be a breach of contract for Disney to have
allowed other Disney affiliates to benefit from use of songs that
Gilkyson wrote without paying his heirs the applicable royalties:
“When Disney Enterprises, directly, or through one of its
affiliates besides Wonderland, makes money or otherwise
benefits from Gilkyson’s songs by way of mechanical
reproduction, including audiovisual and/or audio-only
reproduction in home entertainment mechanical playback
6
devices, they bear the royalty burden for receiving such benefit.”
6
In its reply memorandum in support of the summary
judgment motion, Disney emphasized, notwithstanding the
discovery of several intra-Disney licensing agreements as
described in Green’s amended declaration, the Gilkyson heirs did
not dispute that neither of Disney’s music publishing entities had
received any revenue for the use of the Gilkyson-composed songs
in home entertainment releases during the limitations period
(that is, since July 15, 2009).
13
The trial court denied Disney’s motion. Although
disagreeing with the Gilkyson heirs’ assertion that
synchronization rights are a subset of mechanical reproduction
rights or that in 1963 the parties would have expected Gilkyson
to be paid royalties for use of his songs in a home entertainment
version of motion picture, the court found triable issues “at least
with respect to the use of ‘The Bare Necessities’ in menus on
digital media, i.e., menus in conjunction with still images.” The
court did not address Disney’s argument that no royalties were
due because no revenue had been received for exploitation of
mechanical reproduction rights in home entertainment releases
during the limitations period.
6. The Gilkyson Heirs’ Motion in Limine No. 5
Prior to trial the Gilkyson heirs moved to exclude evidence
and argument that Wonderland had received no compensation for
exploitation of the mechanical reproduction rights in home
entertainment releases, contending it was both irrelevant and
prejudicial. Specifically, they argued allowing evidence or
argument that Wonderland had no obligation to secure royalties
from its affiliates and that, as a result, the Gilkyson heirs were
not entitled to royalties “is an interpretation of the contracts that
is not permitted under California law and should be excluded
because it would confuse and mislead the jury.” In opposition
Disney responded it was entitled to present evidence and
argument in support of its defense there was no breach of
contract “because Defendants have no duty to pay royalties for
uses for which Wonderland was not compensated.”
At the hearing on the motion in limine, Disney’s counsel
reiterated its position, “I think the fact they didn’t receive
anything is dispositive of a breach of contract claim, but surely
14
we need to be able to point to that language and argue from the
fact that Gilkyson—Wonderland did not receive any amount.”
The trial court rejected that position, “It’s what they should have
done and what they should have paid.” Disney’s counsel replied,
7
“But we’ll reserve on at least that issue, Your Honor.”
7. The Jury Trial
a. The liability theory
Through their own testimony based on their experience in
the music industry and that of an industry-practice expert, the
Gilkyson heirs at trial argued they were entitled to royalty
payments based on four categories of use of Gilkyson-composed
music or lyrics in Disney’s home entertainment releases:
audiovisual (synch) uses, including use of “The Bare Necessities”
in the motion picture itself and in bonus features; songs used
with static (non-moving) images; use of the demo sound
8
recordings of deleted songs made by Gilkyson; and use of the
7
The following day, as the court and counsel considered
Disney’s motions in limine, Disney’s counsel stated with respect
to its motion to exclude the damage testimony of plaintiffs’
expert, “We continue to maintain that Mr. Reith’s approach does
not comport with the language of the contract as it relates to net
amounts received by the music publisher. I understand the court
to have disagreed with us on this and, therefore, I assume this
motion is denied . . . .” The court agreed with counsel, “Yeah, I
think so.”
8
A master use license permits the licensee to use a specific
copyrighted sound recording of a composition. (See 6 Nimmer on
Copyright (2013) Master Recording Agreements, § 30.03, p. 30-77
[“[c]opyright ownership of the physical embodiment of the
performance of a musical composition (e.g., a master recording) is
15
lyrics alone of “The Bare Necessities” in the Bear-E-Oke sing-
along bonus feature in the 2014 Diamond Edition. The theory of
the case was that Wonderland should have charged its affiliated
home entertainment division for each of these uses of Gilkyson-
composed songs, music and lyrics.
Disney contested the Gilkyson heirs’ expert testimony with
its own experts, who opined that mechanical reproduction rights
did not include use of songs in a motion picture or other
audiovisual medium. A Disney vice-president for licensing also
testified, when it owned all the rights to a song in a motion
picture, the policy was that Disney’s music group, including
Wonderland, would not charge an intercompany (that is, intra-
Disney) fee for the home entertainment release of the motion
9
picture. The Gilkyson heirs’ expert had also conceded on cross-
examination that in his experience at Warner Bros., when a
motion picture studio owned all rights to an original song, as
here, no intercompany fee was charged for use of the music on
home entertainment media.
distinct from the ownership of the copyright in the musical
composition itself”].) The Gilkyson heirs argued they were
entitled to royalties not only for the mechanical reproduction of
the compositions but also for the use of Gilkyson’s demo
recordings of the deleted songs.
9
The witness testified he believed the 2003 licensing
agreement in which Wonderland charged Walt Disney Television
Animation a fee for using “The Bare Necessities” in The Jungle
Book 2 should not have been considered a licensable event.
16
b. Damages
The Gilkyson heirs’ damage expert calculated the amount
of royalties that should have been paid on a per-use per-unit
basis. That is, the expert counted the number of times any of the
Gilkyson-composed songs were used on a given home
entertainment release, assessed a royalty fee (50 percent of the
royalty rate Wonderland should have charged) and multiplied the
amount due per unit by the number of units sold. This method
generated a total damage figure of $14,402,887.83 with more
than $11 million in the audiovisual category. Disney’s damage
expert presented an alternate model, testifying, if Wonderland
were to collect a fee for Disney’s home entertainment division’s
use of the songs, it would have charged a one-time, lump-sum fee,
rather than a continuing per-unit or per-use per-unit continuing
royalty payment. Disney’s witnesses testified such a lump-sum
fee would be no more than $75,000 for “The Bare Necessities” and
$1,000 or $2,000 for each of the songs that had not been used in
the film. The Gilkyson heirs would be entitled to 50 percent of
those sums.
c. Motion for nonsuit
After the Gilkyson heirs completed their case-in-chief,
Disney moved for nonsuit on the ground the contracts required
payment of royalties only as a percentage of the net amount
received by Wonderland for exploitation of the mechanical
reproduction rights and no testimony or other evidence had been
presented that any such amounts had been received within the
limitations period on account of the home entertainment releases
at issue in the litigation. The court denied the motion, stating,
“Oh, I don’t think so.”
17
The jury answered “yes” as to both Disney Enterprises and
Wonderland to the question on the special verdict form, “Did a
Defendant fail to pay royalties to Eliza Gilkyson, Tony Gilkyson
and Nancy Gilkyson that the contract required them to pay,
arising from . . . ‘the licensing or other disposition of the
mechanical reproduction rights in and to material so written’ by
Terry Gilkyson?”
The damages question asked, “What amount, if any, do you
find as damages arising from any or all of the following category
of uses?” The question then directed the jury to indicate whether
any damages awarded had been calculated on per-use per-unit,
per-unit, or lump-sum basis. The jury awarded total damages of
$350,000: nothing for audiovisual uses and master uses of demo
sound recordings; $300,000 on a lump-sum basis for song uses
with static images; and $50,000 on a lump-sum basis for the use
of lyrics in Bear-E-Oke.
8. The Trial Court’s Determination of the Declaratory Relief
Cause of Action
Immediately after the jury returned its verdict and was
excused on May 11, 2018, the court stated, “So based on the
verdict, I don’t think there’s anything else for us to do, is there?”
The following exchange then took place:
“MR. BARKER [counsel for the Gilkyson heirs]: Well,
there’s the dec relief they awarded in two of the categories.
“THE COURT: Lump sum though.
“MR. BARKER: Lump sum, but that’s past damages;
right? So going forward, if they sell another DVD with those
units on there, what do we get?
“MR. RANSOM [counsel for Disney]: Your Honor, That’s
not the way the evidence was presented. The evidence was
18
presented that the lump-sum alternative was a one-time fee for
all uses of any sort.
“MR. BARKER: Well, based on what Mr. Zajic—
“ . . . . [an exchange between the court and the court
reporter]
“MR. BARKER: Actually, the testimony throughout the
trial, the way the defendants presented it was this lump sum
could be for each event that comes along. There wasn’t a lump-
sum buyout. They presented it specifically as a—
“THE COURT: I think we’d better have this briefed.
“MR. RANSOM: That’s fine, Your Honor.”
There followed a year with multiple rounds of briefing,
hearings and tentative rulings by the court concerning the proper
scope of the Gilkyson heirs’ declaratory relief cause of action,
whether the jury’s verdict that Disney had no liability for
audiovisual uses of the Gilkyson compositions and master uses of
the demo sound records was merely advisory, the propriety of any
award of damages for future home entertainment sales and the
appropriate method of calculating damages, if any. The Gilkyson
heirs argued Disney had an ongoing obligation to pay royalties in
the future for mechanical reproduction of Gilkyson-composed
songs, the jury’s award of zero damages for audiovisual use of
“The Bare Necessities” did not bind the court in the equitable
proceeding, and the court should declare a per-use per-unit rate
of compensation for any future exploitation of the material.
Disney’s position was that the jury verdict was binding as to
which categories of use were compensable under the contracts
and that the lump-sum award covered potential future sales.
On June 21, 2019 the court issued its final ruling on the
matter, “adopt[ing] the explicit and implicit findings of the jury
19
as set forth in the Special Verdict of May 11th, 2018,” and
awarding the Gilkyson heirs future damages of $699,316.40. The
court ordered payment only for the two categories of use for
which the jury had awarded damages. As for its calculation of
future royalties, based on the jury instruction that damages were
for the period “July 15, 2009 and continuing to the present time,”
the court determined the jury’s lump-sum right-to-use award had
been limited to that time period, rejecting Disney’s argument it
would have made a single payment for all time. The court also
ruled Disney’s argument it could stop compensable uses in the
future was “irrelevant because the breach had already occurred
according to the jury’s findings and the only question is
compensation for the expected royalties using the damage model
the jury used.”
The court reasoned, in light of its instruction, the jury
award had been based on 31 three-month quarters (seven years,
nine months), which equated to $9,677.42 per quarter for song
uses with static images and $1,612.90 per quarter for use of the
lyrics in Bear-E-Oke. The court found it likely that future
generations would have continuing interest in the “collaborative
audio and visual creations at issue here and will acquire access to
them in various manners,” but that a looking-forward damage
calculation had to include “the very real likelihood of decreased
value over time.” Using those assumptions, the court calculated
damages in six-year periods for what it determined was the life of
the copyrights, starting with the total jury award of $350,000 for
2018-2024, the initial post-verdict period, and decreasing that
amount by 50 percent for each successive six-year period, ending
with $683.59 for the final three years, 2081-2083.
Judgment was entered on June 21, 2019.
20
9. Postjudgment Proceedings
Following entry of judgment, the Gilkyson heirs moved for
an award of prejudgment interest and separately for a new trial
on the issue of damages or for additur in the two categories of use
as to which the jury and the court had awarded damages,
challenging the lump-sum methodology, as well as the amount of
both the jury’s verdict and the court’s additional award. The
10
court denied both motions.
As to prejudgment interest, the court found damages as
found by the jury were not “certain or capable of being made
certain by calculation” as required for an award of prejudgment
interest (Civ. Code, § 3287, subd. (a)) because royalties from
exploitation of mechanical reproduction rights in various new
media were not contemplated in the parties’ 1963 agreements
and were not reasonably ascertainable as to amounts absent
substantial litigation.
As to the motion for a new trial or additur, the court noted
the Gilkyson heirs’ expert had agreed the lump-sum settlement
method advanced by Disney had been used by him in his position
at Warner Bros. with respect to song usage in new media. After
pointing out the jury’s award was nearly 10 times the lump sum
suggested by Disney’s expert, the court found that award was
supported by the evidence. Concerning its own assessment of
future damages, the court explained, “[T]he law frequently will
award future damages as some multiple of past damages. Using
a two times multiple, given the uncertainty of any future uses at
all, the court considered that $700,000.00 would be a fair and
10
The court granted in part Disney’s postjudgment motion to
tax costs.
21
reasonable figure more or less in line with what the jury had
found.”
Disney filed a timely notice of appeal, and the Gilkyson
heirs filed a timely notice of cross-appeal.
DISCUSSION
1. Principles of Contract Interpretation; Standard of
Review
Disney contends, pursuant to paragraph 6(c) of its 1963
agreements with Gilkyson, the Gilkyson heirs’ royalty rights are
limited to 50 percent of the “net amount received by our music
publisher” for exploitation of the mechanical reproduction rights
in the material Gilkyson had composed. Because no such
amounts were received by Wonderland (or any other Disney
affiliate) for licensing those rights for the home entertainment
releases at issue in the lawsuit within the governing limitations
period, Disney argues the trial court erred in denying its motion
for summary judgment and its motion for nonsuit, both of which
advanced this contract interpretation. The Gilkyson heirs
disputed this interpretation of the contract, as did the trial court,
which, as discussed, instructed the jury, “Plaintiffs claim
damages for amounts they contend should have been collected
and shared with them based on the use of the Jungle Book songs
in home entertainment releases after the period of July 15, 2009
and continuing to the present time.”
Absent any conflict in extrinsic evidence, we review de novo
issues regarding the proper interpretation of a contract. (See
City of Hope National Medical Center v. Genentech, Inc. (2008)
43 Cal.4th 375, 395; Garcia v. Truck Ins. Exchange (1984)
36 Cal.3d 426, 439 [“[i]t is solely a judicial function to interpret a
written contract unless the interpretation turns upon the
22
credibility of extrinsic evidence, even when conflicting inferences
may be drawn from uncontroverted evidence”]; Hanna v.
Mercedes-Benz USA, LLC (2019) 36 Cal.App.5th 493, 507 [“in the
absence of any conflict in extrinsic evidence presented to clarify
11
an ambiguity,” written agreements are interpreted de novo].)
The fundamental goal of contract interpretation is to give
effect to the mutual intention of the parties as it existed at the
time they entered into the contract. (Hartford Casualty Ins. Co.
v. Swift Distribution, Inc. (2014) 59 Cal.4th 277, 288; Bank of the
West v. Superior Court (1992) 2 Cal.4th 1254, 1264; see Civ. Code,
§ 1636.) That intent is interpreted according to objective, rather
than subjective, criteria. (Brown v. Goldstein (2019)
34 Cal.App.5th 418, 432; Wolf v. Walt Disney Pictures &
Television (2008) 162 Cal.App.4th 1107, 1126 (Wolf).) When the
contract is clear and explicit, the parties’ intent is determined
solely by reference to the language of the agreement. (Brown, at
p. 432 [“[o]rdinarily, the objective intent of the contracting
parties is a legal question determined solely by reference to the
11
Disney discussed the de novo standard of review in its
opening brief, citing this court’s opinion in Wolf v. Walt Disney
Pictures & Television (2008) 162 Cal.App.4th 1107 for the well-
established principle that interpretation of a written instrument
is solely a judicial function when based on the words of the
instrument alone or when there is no conflict in the extrinsic
evidence, even when conflicting inferences may be drawn from
the undisputed extrinsic evidence (id. at pp. 1126-1127), and for
our holding that, when interpretation of the contract presents a
question of law, the court of appeal will decide it de novo, even if
the trial court erroneously submitted the question to the jury (id.
at pp. 1134-1135). The Gilkyson heirs’ argument Disney failed to
sufficiently identify the appellate standard of review fails.
23
contract’s terms”]; see Civ. Code, §§ 1638 [“language of a contract
is to govern its interpretation, if the language is clear and
explicit, and does not involve an absurdity”], 1639 [“[w]hen a
contract is reduced to writing, the intention of the parties is to be
ascertained from the writing alone, if possible”].) The words are
to be understood “in their ordinary and popular sense” (Civ. Code,
§ 1644); and the “whole of [the] contract is to be taken together,
so as to give effect to every part, if reasonably practicable, each
clause helping to interpret the other.” (Civ. Code, § 1641.)
2. Disney’s Contract Argument Is Properly Before This
Court
The Gilkyson heirs advance several different reasons why
we should decline to consider Disney’s net receipts contract
interpretation argument. None has merit.
First, they assert Disney failed to properly raise this issue
in the trial court, contending that in Disney’s summary judgment
motion the argument was derivative of its claim concerning the
limited nature of mechanical reproduction rights (that is, Disney
argued, because there was no exploitation of mechanical
reproduction rights in the home entertainment releases,
Wonderland had collected no licensing fees). But the heading for
this portion of Disney’s memorandum of points and authorities in
support of summary judgment plainly stated the issue in broader
terms: “Defendants are entitled to summary judgment because
the contracts limit royalties to those uses for which Wonderland
received money.”
The Gilkyson heirs perhaps misunderstood Disney’s
argument, asserting in their opposition memorandum that, if a
Disney affiliate other than Wonderland received licensing fees
from the home entertainment division for exploitation of the
24
mechanical reproduction rights, they would still be entitled to a
share of royalties under the agreements. However, no evidence
was presented, either at the time of the summary judgment
motion or at trial, that any such fees were ever collected by any
Disney affiliate during the limitations period. Moreover,
elsewhere in their opposition the Gilkyson heirs argued it would
be contrary to the parties’ intent to interpret the contracts to
allow “self-dealing” that permitted any Disney entity to benefit
from the use of mechanical reproduction rights without paying
the Gilkyson heirs royalties—precisely the contract
interpretation (without the pejorative descriptor) advanced by
Disney. In any event, Disney’s reply memorandum clearly
defined the issue, emphasizing it was undisputed that neither of
Disney’s music publishing entities had received any revenue for
the use of Gilkyson-composed songs in home entertainment
releases during the limitations period and arguing, “The alleged
failure to pay money ‘received by [Disney’s] music publisher’
during the limitations period is a critical element of Plaintiffs’
breach of contract claim. Because no amounts were received,
there were no royalties to pay, and therefore no breach of the
Contracts. Summary judgment should be granted on this basis
as well.”
Disney’s argument concerning the proper interpretation of
the Gilkyson heirs’ right to recover royalties was subsequently
addressed in connection with their motion in limine no. 5. As
discussed, the trial court rejected Disney’s analysis, stating the
issue in the case was not about Wonderland’s actual receipts.
“It’s what they should have done and what they should have
paid.”
25
The oral motion for nonsuit, although succinct, was also
sufficient to once again identify the issue, which had previously
been fully articulated before the court. The summary denial of
the motion reflected the court’s lack of agreement with Disney’s
motion, not any lack of understanding of the issue of contract
interpretation it raised.
Similarly misplaced is the contention Disney is estopped
from making its contract interpretation argument because
Disney objected in discovery to producing certain financial
information and thereafter successfully moved in limine to
preclude the Gilkyson heirs from introducing evidence of the
wealth of the Disney enterprise or the gross revenues or profits
generated by the theatrical and home entertainment releases of
The Jungle Book or its songs. Those objections were based
precisely on Disney’s claim that the only relevant financial
information was the amount received by Wonderland for the
songs’ use (which was nothing), not the revenue generated by the
Jungle Book franchise as a whole.
Finally, the Gilkyson heirs argue Disney waived its net
receipts argument because it proposed the language instructing
the jury that the plaintiffs sought damages for amounts they
contend should have been collected for use of the Gilkyson-
composed songs and did not request an instruction on its own
contract interpretation theory. But Disney’s position in the trial
court, as it is on appeal, was that “net amount received” is not a
disputed term that can only be construed after resolution of
conflicting extrinsic evidence by the finder of fact; rather, the
meaning of the contract was a question of law for the court, not
the jury. As for the jury instruction that was given, having
unsuccessfully advanced its legal position as to the meaning of
26
the contract on several occasions, Disney was entitled to propose
instructions that embraced the court’s view of the legal
landscape. (See Mary M. v. City of Los Angeles (1991) 54 Cal.3d
202, 212-213 [“[a]n attorney who submits to the authority of an
erroneous, adverse ruling after making appropriate objections or
motions, does not waive the error in the ruling by proceeding in
accordance therewith and endeavoring to make the best of a bad
situation for which he was not responsible,” internal quotation
marks omitted]; American Master Lease LLC v. Idanta Partners,
Ltd. (2014) 225 Cal.App.4th 1451, 1472-1473 [the doctrine of
invited error does not apply when a party, while making the
appropriate objections, acquiesces in a judicial determination].)
3. The 1963 Contracts Did Not Obligate Disney To Collect
Fees for Intercompany Exploitation of the Mechanical
Reproduction Rights or To Pay Royalties to Gilkyson
When Licensing Fees Were Not Charged
a. The plain language of the 1963 contracts gives Disney
the right to exploit the mechanical reproduction
rights without paying royalties
The express language of the 1963 contracts limits the
Gilkyson heirs’ right to receive royalties to a share of the net
amount received by Wonderland for licensing or other disposition
of the mechanical reproduction rights to the material written by
Gilkyson. The first portion of paragraph 6 provides, whether any
of the material is published by Disney (that is, Disney makes
direct use of the music or lyrics) or licensed by Disney to be
published in the media identified in subparagraphs (a), (b) and
(c), Gilkyson was to receive royalties “as hereinbelow set forth.”
Subparagraph (c) specifies with respect to mechanical
reproduction rights that the royalties were to be “[a]n amount of
money equal to Fifty Percent (50%) of the net amount received by
27
our music publisher on account of licensing or other disposition of
12
the mechanical disposition rights” to the Gilkyson compositions.
Paragraph 7 of the agreement reinforced the limited nature
of Gilkyson’s royalty rights. That paragraph specifically provided
that Gilkyson had no right to royalties in connection with the
exercise of any performance rights by Disney (“grand rights,
dramatic rights, television rights and other performance rights,
including the use of the material in motion pictures, photoplays,
books, merchandising, television, radio and endeavors of the
same or similar nature”) and explicitly reaffirmed that Gilkyson
“shall be entitled to receive as royalties only the moneys and/or
royalties stipulated in and in accordance with Paragraph 6
above.”
Significantly for purposes of the Gilkyson heirs’ liability
theory—that they are entitled to royalties based on fees that
Wonderland should have collected—nothing in the language of
the contracts imposed an obligation on Disney to exploit the
mechanical reproduction rights at all or, if it elected to do so, to
exploit them in any particular manner. Indeed, paragraph 10
states exactly the contrary: “Nothing contained in this
agreement shall be construed as obligating us to publish, release,
exploit or otherwise distribute any of the material, and the same
shall be always subject to our sole discretion.”
Based on the language of the 1963 contracts, Wonderland
had the right to permit its home entertainment affiliate to use
12
Although the contracts state net receipts by the music
publisher, subsequently defined to be Wonderland, provide the
measure of the royalties due to Gilkyson, paragraph 13
authorizes payment of royalties by either Walt Disney
Productions or the music publisher.
28
the Gilkyson-composed songs without charging an intercompany
license fee and without incurring any liability to Gilkyson or his
heirs when doing so. (See Lange v. Monster Energy Co. (2020)
46 Cal.App.5th 436, 445 [“‘[o]rdinarily, the objective intent of the
contracting parties is a legal question determined solely by
reference to the contract’s terms’”]; Wolf, supra, 162 Cal.App.4th
at p. 1126 [same].) Had the parties intended that Disney would
use its best efforts to exploit the mechanical reproduction rights
in a manner that generated royalties for Gilkyson, the contracts
would not have expressly granted Disney such unfettered
discretion. (See Wolf, at p. 1121 [“if the express purpose of the
contract is to grant unfettered discretion, and the contract is
otherwise supported by adequate consideration, then the conduct
is, by definition, within the reasonable expectation of the
parties”]; see also Carma Developers (Cal.), Inc. v. Marathon
Development California, Inc. (1992) 2 Cal.4th 342, 374 [“‘[t]he
general rule [regarding the covenant of good faith] is plainly
subject to the exception that the parties may, by express
provisions of the contract, grant the right to engage in the very
acts and conduct which would otherwise have been forbidden by
an implied covenant of good faith and fair dealing,’” second
brackets in original].)
The contrary plain-language interpretation advanced by
the Gilkyson heirs is that the first portion of paragraph 6 (what
they refer to as the preamble), which states Gilkyson is entitled
to royalties whether the material he composed “be published by
us or be licensed by us to be published,” means royalties are due
whether Wonderland receives money from licensing or a Disney
affiliate exploits the mechanical reproduction rights directly
without an intercompany fee. That proposed interpretation of
29
the 1963 agreements would require us to disregard the express
limiting language of paragraph 6(c). Yet we are obligated in
construing a contract, if possible, to give effect to all of its
provisions and to give meaning to the parties’ choice of language.
(Flores v. Nature’s Best Distribution, LLC (2016) 7 Cal.App.5th 1,
9 [“[t]he whole of a contract is to be taken together, so as to give
effect to every part, if reasonably practicable, each clause helping
to interpret the other,” internal quotation marks omitted]; see
Wolf, supra, 162 Cal.App.4th at p. 1136; Aozora Bank, Ltd. v.
1333 North California Boulevard (2004) 119 Cal.App.4th 1291,
1296; see also Civ. Code, § 1641; Code Civ. Proc., § 1858.) Giving
effect to the reference in the first portion of paragraph 6 to “as
hereinbelow set forth” and to the net receipts language in
paragraph 6(c), as well as to the grant of sole discretion to Disney
to determine whether and how to exploit the mechanical
reproduction rights, requires that we reject the Gilkyson heirs’
construction of the agreements as unreasonable. (See generally
Wolf, at pp. 1121-1123 [no obligation to pay royalties based on
licensing characters for promotional benefits in lieu of monetary
consideration where contract provided royalties were based on
“gross receipts” and Disney had full discretion over whether to
charge for licensing rights].)
b. The Gilkyson heirs introduced no extrinsic evidence
that supported a different interpretation of the
contracts
To bolster their plain-language claim, the Gilkyson heirs
contend extrinsic evidence confirmed their proposed
interpretation of the contracts, pointing out that Wonderland and
other Disney music publishing subsidiaries had issued licenses
for Disney affiliates’ use of “The Bare Necessities” in home
30
entertainment media in periods prior to July 15, 2009. (Cf. City
of Hope National Medical Center v. Genentech, Inc., supra,
43 Cal.4th at pp. 393-394 [a party’s predispute, post-contracting
conduct is powerful evidence of that party’s intent and
understanding of the contract at the time it entered into the
agreement]; Crestview Cemetery Assn. v. Dieden (1960) 54 Cal.2d
744, 753-754 [same].) That evidence, however, does not in any
way indicate that Disney was obligated to do so by the terms of
the 1963 agreements and is not inconsistent with Disney’s
position that the Gilkyson heirs were not entitled to royalties
when Wonderland or the other publishing subsidiaries exercised
13
their right not to require such a license.
The Gilkyson heirs’ other extrinsic evidence is equally
unpersuasive. The testimony of their industry expert cited in the
combined respondents’ brief and cross-appellants’ opening brief
included only the expert’s own interpretation of the contract
language (“it talks about licensing, which could be involving the
music publisher or other disposition, which could be exploitation
done by Disney itself”), not admissible parol evidence of industry
custom or practice. (See Summers v. A.L. Gilbert Co. (1999)
13
Because the existence of earlier intercompany licenses for
the mechanical reproduction rights was undisputed,
interpretation of the contracts remained a question for the court
despite the parties’ disagreement as to the inferences to be drawn
from that evidence. (See City of Hope National Medical Center v.
Genentech, Inc., supra, 43 Cal.4th at p. 395; Garcia v. Truck Ins.
Exchange, supra, 36 Cal.3d at p. 439; Wolf, supra,
162 Cal.App.4th at p. 1134 [“[t]here was no ‘conflict’ in the
evidence of Disney’s predispute conduct, and thus no factual issue
for the jury to resolve”].)
31
69 Cal.App.4th 1155, 1180 [expert opinion on the legal
interpretation of contracts is inadmissible]; Cooper Companies v.
Transcontinental Ins. Co. (1995) 31 Cal.App.4th 1094, 1100 [“the
meaning of the policy is a question of law about which expert
opinion testimony is inappropriate”]; cf. Ermolieff v. R.K.O. Radio
Pictures, Inc. (1942) 19 Cal.2d 543, 550 [“while words in a
contract are ordinarily to be construed according to their plain,
ordinary, popular or legal meaning, as the case may be, yet if in
reference to the subject matter of the contract, particular
expressions have by trade usage acquired a different meaning,
and both parties are engaged in that trade, the parties to the
contract are deemed to have used them according to their
different and peculiar sense as shown by such trade usage”]; Wolf
v. Superior Court (2004) 114 Cal.App.4th 1343, 1357 [evidence
regarding trade usage and custom is admissible to prove an
interpretation to which the agreements at issue were reasonably
susceptible in the entertainment industry context].)
The testimony the Gilkyson heirs cite from Disney’s vice-
president of music licensing, Dominic Griffin, is equally unhelpful
to their position. Griffin testified in response to a hypothetical
question that, if a Disney entity sold sheet music for a Gilkyson-
composed song, Gilkyson would get paid 5 cents even if no license
14
fee had been collected. Even if this were not an inadmissible
personal opinion on the meaning of the contracts, paragraph 6(a)
provides for payment of a royalty of 5 cents for each copy of sheet
14
The Gilkyson heirs’ counsel asked, “In that sense, it doesn’t
really matter which Disney entity licensed or didn’t license it. If
the exploitation occurred, the sheet music was sold, Terry
Gilkyson should get paid?” Griffin answered, “Yes.”
32
music sold by Disney and paid for at wholesale in the
United States and Canada; it does make the royalty payment
dependent on net sums received by the music publisher, as does
paragraph 6(c).
Finally, the testimony of Nancy Gilkyson (a music industry
executive) that it appeared from her review of the records that
Disney “played shell games with the money,” and the testimony
of the Gilkyson heirs’ entertainment industry damages expert
that Disney benefited from not having the expense of paying the
Gilkyson heirs’ royalties when Disney exploited mechanical
reproduction rights in home entertainment media without an
intercompany license, while unquestionably central to the
Gilkyson heirs’ narrative, do not constitute extrinsic evidence of
the parties’ intent when entering the 1963 contracts.
c. No principle of California law justifies disregarding
the parties’ objective manifestation of their intent as
expressed in the language of the contracts
While disclaiming any reliance on the implied covenant of
15
good faith and fair dealing —that is, insisting they are not
arguing Disney had an implied obligation to exercise its
discretion with respect to the manner in which it exploited the
mechanical reproduction rights so as not to unfairly deprive
Gilkyson and his heirs of their share of royalties (see, e.g., Carma
Developers (Cal.), Inc. v. Marathon Development California, Inc.,
15
As discussed, the trial court denied leave to file a second
amended complaint that would have added a cause of action for
breach of the implied covenant of good faith and fair dealing. The
Gilkyson heirs do not contend a separate cause of action is
unnecessary for the plaintiff in a contract action to assert a
breach of the implied covenant.
33
supra, 2 Cal.4th at p. 372 [the implied covenant “finds particular
application in situations where one party is invested with a
discretionary power affecting the rights of another. Such power
must be exercised in good faith”])—the Gilkyson heirs cite several
general provisions of California law to argue Disney’s net receipts
interpretation of its 1963 agreements must be rejected. As they
state, Civil Code section 3512, a maxim of jurisprudence,
provides, “One must not change his purpose to the injury of
another”; and Civil Code section 3521, another maxim, reads, “He
16
who takes the benefit must bear the burden.” More specific to
contract interpretation, Civil Code section 1648 provides,
“However broad may be the terms of a contract, it extends only to
those things concerning which it appears that the parties
intended to contract.” And Civil Code section 1652 provides,
“Repugnancy in a contract must be reconciled, if possible, by such
an interpretation as will give some effect to the repugnant
clauses, subordinate to the general intent and purpose of the
17
whole contract.”
Taken together, the Gilkyson heirs argue, these provisions
mandate an interpretation of the 1963 contracts that is faithful to
the underlying purpose of the parties’ agreement, which was for
Disney to obtain songs to exploit and for Gilkyson to receive
16
The maxims of jurisprudence “are intended not to qualify
any of the foregoing provisions of [the Civil Code], but to aid in
their just application.” (Civ. Code, § 3509.)
17
“Repugnancy” in this context means a direct conflict among
clauses of a contract (see, e.g., In re Marriage of Williams (1972)
29 Cal.App.3d 368, 379), not general unfairness, as the Gilkyson
heirs argued in the trial court.
34
compensation, including royalties, for that exploitation. As
discussed, however, the construction of the contracts proposed by
the Gilkyson heirs would effectively require us to rewrite the
express language of the parties’ agreement, which granted
Disney sole discretion to determine how to exploit the rights it
obtained from Gilkyson and limited Gilkyson’s right to receive
royalties from that exploitation to net receipts, as set forth in
paragraph (c). We are not authorized to do that. (See In re
Mission Ins. Co. (1995) 41 Cal.App.4th 828, 837-838 [“‘[w]hen the
language of a contract is plain and unambiguous it is not within
the province of a court to rewrite or alter by construction what
has been agreed upon’”]; see also Third Story Music, Inc. v. Waits
(1995) 41 Cal.App.4th 798, 808 [“courts are not at liberty to imply
a covenant directly at odds with a contract’s express grant of
discretionary power except in those relatively rare instances
when reading the provision literally would, contrary to the
parties’ clear intention, result in an unenforceable, illusory
agreement”]; see generally Civ. Code, §§ 1638, 1639.)
In sum, interpretation of the Gilkyson heirs’ right to
receive royalties for exploitation of the mechanical reproduction
rights in Gilkyson-composed material—regardless of the parties’
dispute as to the scope of those rights—was properly a question
for the court; and Disney’s net receipts interpretation of
paragraphs 6 and 6(c) is the more reasonable construction of the
contracts. Accordingly, the trial court erred in denying Disney’s
motions for summary judgment and for nonsuit. Judgment
should have been entered in favor of Disney as a matter of law.
35
DISPOSITION
The judgment is reversed, and the cause remanded with
directions to enter a judgment in favor of Disney. Disney is to
recover its costs on appeal.
PERLUSS, P. J.
We concur:
SEGAL, J.
FEUER, J.
36