The opinion of the court was delivered by: WYATT
This is a motion by defendant Hallmark Releasing, Inc. (Hallmark) for an order dismissing the complaint for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Affidavits are submitted in support of the motion and in opposition. The motion therefore under Fed.R.Civ.P. 12(b) is to be treated as one for summary judgment (Fed.R.Civ.P. 56). The motion is denied.
The facts are not really in dispute and for purposes of this motion the averments of the complaint are accepted as true by movant. The facts are relatively simple.
Plaintiff (Pagoda) is an exhibitor and distributor of movies.
Defendant Golden Harvest (H.K.) Ltd. (Harvest) produces movies in Hong Kong.
On November 12, 1971, Pagoda and Harvest made an agreement under which Harvest agreed to sell Pagoda ten films "for exclusive showing rights in the United States . . . limited to five years from delivery date . . ." (complaint, para. 4).
Harvest delivered to Pagoda a film "The Lady Whirlwind" (Lady) on August 23, 1972, and Pagoda thus had exclusive showing rights to Lady for five years from that date.
Harvest at some time in 1972 and in breach of its agreement with Pagoda granted to defendant Cathay Film Distributors Private Limited (Cathay) exclusive showing rights to Lady in the United States and elsewhere.
Under date of April 9, 1973, Cathay and Hallmark made a written agreement under which Cathay warranted that it was the owner of Lady and had "sole and exclusive rights for exhibition" of Lady. Cathay then granted to Hallmark "the exclusive right and license to exhibit" Lady in the United States for seven years. Hallmark paid in April 1973 the sum of $45,000 for its rights; this sum is referred to at one point in the agreement as "royalty". Hallmark among other things promised to return or destroy all prints of Lady at the expiry of the agreement.
Hallmark formed some sort of association with defendant American International Pictures, Inc. and began exhibiting Lady on May 2, 1973 in New York.
Pagoda promptly notified Hallmark and the other defendants that the contract of Pagoda with Harvest "had been thereby violated" and demanded that they cease exhibition of Lady "in derogation of plaintiff's contractually acquired rights and in violation of law". This notice was on May 3, 1973.
Hallmark rejected the notice and demand of Pagoda.
Exhibition of Lady by defendants continued.
This action was commenced on June 12, 1973. Jurisdiction is asserted on the basis of diversity of citizenship (28 U.S.C. § 1332) and ...