This is an appeal from the final judgment upon a special verdict entered in favor of plaintiff-appellees following a jury trial in the Southern District of New York before Judge Motley. The appeal challenges, inter alia, the content and the manner in which special interrogatories were submitted to the jury.
Feinberg, Chief Judge, Winter, Circuit Judge, and Jacob Mishler, District Judge.*fn*
Plaintiff-appellees instituted this diversity action in federal district court in June 1980. The amended complaint stated three claims for relief arising out of a course of dealings between the parties in connection with the now released motion picture entitled "VENOM".
Plaintiff Frank P. Rosenberg ("Rosenberg") and defendant Martin T. Bregman ("Bregman") at all relevant times have been engaged in the production of motion pictures. In the winter in 1977, Rosenberg and Bregman competed in a bidding for an option contract on the motion picture rights to an unpublished novel upon which the film VENOM is based.*fn1 Shortly after Bregman outbid Rosenberg on the option contract, Rosenberg telephoned him about the possibility of their working together on the film's production. The conversations and writings between the parties concerning that subject occurring over the two and one-half years following Rosenberg's March 1977 telephone call to Bregman constituted the major part of Rosenberg's case at trial in support of his breach of contract claim. Plaintiffs' pleading states that Rosenberg and Bregman had "entered into an oral agreement and joint venture to jointly produce" VENOM. Plaintiffs sought an accounting as well as punitive damages for defendants' alleged malicious and fraudulent breach of the joint venture which culminated in Bregman's unilateral termination of the relationship on February 19, 1980.
In response to the special interrogatories given to the jury after eight days of trial which had generated some 1500 pages of transcript, the jury rejected plaintiffs' contention that defendants had breached an oral partnership agreement to co-produce VENOM.*fn2 However, in affirmatively answering Interrogatory 2(a) of the special interrogatories*fn3 and thereafter rejecting defendants' Statute of Frauds defense,*fn4 the jury found that defendants had breached "an [enforceable] oral agreement, though not a partnership" to co-produce VENOM. Finally, the jury found that plaintiffs were not entitled to an award of punitive damages.
At trial and on appeal, defendants contend that the manner in which the theory of a non-partnership oral agreement was submitted to the jury injected a degree of confusion and prejudice into the case constituting reversible error. We agree. We also believe that (1) defendants were unfairly prejudiced by the failure of the district court to disclose the contents of the special interrogatories to counsel before summation and (2) the interrogatories, as drawn by the district court, improperly withdrew from the case a valid theory of defense which had been urged by defendants throughout the trial. Defendants presented a number of other challenges to the judgment entered below which we do not reach.*fn5
Plaintiffs' contention throughout the case was that the parties had orally entered into a joint venture agreement to co-produce VENOM. They cited the enormous quantity of paper produced by Rosenberg and his attorneys as evidence of their efforts to reduce the existing oral joint venture agreement to a writing. Bregman consistently denied that there ever had been an agreement. Instead, he characterized the deluge of written correspondence from Rosenberg and the various conversations admitted into evidence as proof only of the on-going negotiations concerning an offer to Rosenberg to serve in his employment when the picture was actually shot in London.*fn6 The corollary to Bregman's position was that if the jury were to find an agreement, it was an employment contract, not a partnership contract, and under its terms Rosenberg could be discharged for cause. At trial Bregman conceded that Rosenberg was entitled to the reasonable value for such contributions as he had made to the VENOM project prior to his termination.
After both sides had rested, the district court endeavored to sharpen the issues presented by the case. Specifically, it was unclear to the district court whether plaintiffs had attempted to establish alternative contract claims. It had conceived of two different contracts, each containing essentially the same terms (e.g., with respect to Rosenberg's share in the proceeds of the film as well as his management control over the business and creative aspects of the project).
The district court properly elicited the assistance of plaintiffs' counsel for the purpose of crystallizing the theory of their case. Plaintiffs' counsel had substantial difficulty in discerning a meaningful distinction between the two hypothetical contracts as propounded by the court and therefore resisted the court's view of the case.*fn7 Nevertheless, either having been convinced that the non-partnership contract claim was a genuine alternative claim or sensing that submission was the more prudent course, plaintiffs' counsel ultimately adopted the court's view of the case.
Defendants timely objected to the submission of the non-partnership contract theory contending that, as presented in the special interrogatories, it was confusing because it failed to comprehensibly and fairly define the issues for the jury to resolve.*fn8 Further, defendants argued that Interrogatory 2(a) effectively withdrew from the case its theory of defense that, as a mere employee, Rosenberg could be discharged for just cause.
A. Confusion Created by Interrogatory 2(a)
The single difference between the two contract claims, as framed by the district court, was that only one was based on a theory of partnership. After much searching, we believe the distinction was wholly irrelevant except insofar as plaintiffs might have proved their partial performance of an oral partnership agreement thereby defeating defendants' Statute of Frauds defense. Sanger v. French, 157 N.Y. 213, 51 N.E. 979 (1898); Green v. LeBeau, 281 App.Div. 836, 118 N.Y.S.2d 585 (2d Dep't. ...