Brown v. Goldstein
34 Cal. App. 5th 418
Cal. Ct. App. 5th2019Background
- Members of the band WAR assigned copyrights to publisher Far Out Music (FOM) under a series of agreements (1970, 1972 MOA, 1972 long-form, 1975) that set out royalty payments and a separate revenue‑sharing provision.
- Paragraph 7 of the 1972 Agreement excluded writers from sharing in any sums the publisher received from a performing rights organization (PRO) and stated performance royalties were payable only by the PRO to the writer.
- Paragraph 22 of the 1972 Agreement defined "Composition Gross Receipts" as "all monies actually earned and received" from exploitation of the compositions and gave writers a percentage (30%, later modified) of that net pool, "in addition to" royalties under Paragraph 7.
- Plaintiffs alleged FOM had for decades included the publisher’s share of public‑performance income when computing paragraph 22 payments but in 2014 ceased doing so; they sued for breach of contract seeking inclusion of FOM’s performance revenues in Composition Gross Receipts and damages.
- At summary judgment FOM argued the contract unambiguously excluded publisher performance income from paragraph 22 (relying on paragraph 7); plaintiffs submitted extrinsic evidence (MOA, negotiator Clainos's declaration, industry expert Perlstein, accountant Wolinsky and accounting statements) to show ambiguity and course of performance.
- The trial court granted summary judgment for FOM, excluding much extrinsic evidence; the Court of Appeal reversed, finding the contract reasonably susceptible to plaintiffs’ interpretation and that plaintiffs’ construction was more reasonable when extrinsic evidence was considered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Paragraph 22's "Composition Gross Receipts" includes the publisher's share of public‑performance royalties | Paragraph 22's plain phrase "all monies actually earned and received" and the MOA, negotiation history, industry usage, and long course of performance show performance income was included | Paragraph 7 expressly excludes sharing in sums the publisher receives from a PRO and says publisher need not pay performance royalties, so performance income is excluded from Paragraph 22 | Reversed trial court: Paragraph 22 is reasonably susceptible to plaintiffs' reading and, with extrinsic evidence, plaintiffs' interpretation is more reasonable; performance income is includable in Composition Gross Receipts |
| Admissibility and weight of extrinsic evidence (MOA, negotiator's statements, expert usage testimony, accounting statements) | Evidence is admissible to show ambiguity, trade usage, negotiation context, and course of performance supporting plaintiffs' interpretation | Much of plaintiffs' extrinsic evidence should be excluded as irrelevant, hearsay, or lacking foundation | Court of Appeal held much of the proffered extrinsic evidence was properly considered for the ambiguity threshold; where the trial court excluded evidence improperly (e.g., Clainos's recounting of Gold's statements) that exclusion was erroneous; overall the admissible extrinsic evidence supports plaintiffs |
| Whether paragraph 7's exclusion of publisher performance royalties renders paragraph 22's general "all monies" meaningless if performance income is included | Paragraph 7 governs royalties (50% rule) and clarifies writers receive performance royalties directly from PRO, but paragraph 22 is a separate revenue‑sharing pool “in addition to” royalties, so both can be given effect | Inclusion would nullify the specific exclusion in paragraph 7 and conflict within the contract | Court: Both provisions can be harmonized; paragraph 7 limits royalties but does not by its terms exclude performance income from the separate paragraph 22 revenue share |
Key Cases Cited
- Broadcast Music, Inc. v. Roger Miller Music, Inc., 396 F.3d 762 (6th Cir. 2005) (overview of music publishing revenue categories and PRO practice)
- Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging, 69 Cal.2d 33 (Cal. 1968) (parol evidence admissible when contract language is reasonably susceptible to more than one meaning)
- Winet v. Price, 4 Cal.App.4th 1159 (Cal. Ct. App. 1992) (two‑step approach to provisional receipt of extrinsic evidence to determine ambiguity)
- Wolf v. Walt Disney Pictures & Television, 162 Cal.App.4th 1107 (Cal. Ct. App. 2008) (principles on contract interpretation and when extrinsic evidence may be considered)
- Southern Cal. Edison Co. v. Superior Court, 37 Cal.App.4th 839 (Cal. Ct. App. 1995) (ambiguity threshold and effect on summary judgment)
- Universal Sales Corp. v. California Press Mfg. Co., 20 Cal.2d 751 (Cal. 1942) (practical construction by parties’ conduct can be persuasive in resolving contract ambiguity)