The opinion of the court was delivered by: Robert L. Carter, District Judge.
Plaintiff Marvel Entertainment Group is a Delaware
corporation with its principal place of business in New York
City. It is a major publisher and distributor of comic books,
and markets and licenses its own and third-party trademarks and
copyrights. Co-plaintiff Marvel Productions Ltd., a Delaware
corporation with its principal place of business in Van Nuys,
California, is a major producer of animated television shows.
Plaintiffs hereafter will be collectively referred to as
Defendant Young Astronaut Council (the "Council") is a
not-for-profit corporation organized under the laws of the
District of Columbia with its principal place of business in
Washington, D.C. It was created in 1984 with the objective of
encouraging American children to study math and science by
using the United States space program as a catalyst.
Co-defendant Young Astronaut Management Corporation is a
for-profit corporation wholly owned by the Council and
organized under the laws of the District of Columbia, with its
principal place of business in Washington, D.C. Its purpose is
to raise revenue to fund the Council's programs. Defendants
hereafter will be collectively referred to as "YAC".
In 1984, Marvel and YAC entered into an agreement whereby
Marvel was given the sole and exclusive right to use YAC's
name, logo and trademarks to create, design, publish and sell
comic books, magazines and related publications (the
"Publishing Agreement"). While the Publishing Agreement did not
require a certain number of publications, if, after 1988,
Marvel had not published at least six books or paid YAC certain
minimum royalties, YAC was entitled to terminate it.
Subsequently in 1984, a second agreement was entered into by
the parties which authorized Marvel to act as YAC's exclusive
representative to arrange and negotiate licensing agreements
for the commercial use of YAC's names, logos and trademarks and
any YAC related creations of Marvel (the "Merchandising
Agreement"). For its efforts, Marvel was to receive a yearly
set fee plus 10% of any profits.
In 1985, the parties entered into an agreement whereby Marvel
was given the exclusive right to make and produce animated
television shows based on YAC's name, related names, logo and
trademarks (the "T.V. Agreement"). Under this agreement, Marvel
was to receive a fee calculated as a percentage of the license
fee and a percentage of the net profits.
In March, 1986, YAC decided it wanted to terminate its
relationship with Marvel. Discussions and negotiations to that
end proceeded, and on June 30, 1986, the parties signed a
so-called Modification Agreement in Washington, D.C. Under this
agreement, the T.V. and the Merchandising Agreements were
terminated; Marvel's exclusive agency was terminated and YAC
received back the rights to its name, logos, trademarks,
characters and symbols; and Marvel's royalty rate for licenses
purchased by McDonald's was modified. The Modification
Agreement provided that the parties would list all licensing
agreements and pending agreements entered into between YAC and
any licensee, and all such agreements and pending agreements
entered into between Marvel and any licensee. In addition, the
parties agreed to set forth all monies received pursuant to
such agreements from whatever source. It was warranted that
these listings covered all licensing agreements and revenues
derived therefrom, as well as all pending agreements. The
Publishing Agreement was not affected.
Marvel instituted this action in July, 1988, to recover
payments allegedly due under the Modification Agreement. On
October 27, 1989, in an opinion with which familiarity is
presumed, the court granted Marvel partial summary judgment in
the amount of $75,000 based on YAC's obligation to make fixed
compensation payments as required by paragraph 5 of the
Modification Agreement. See, No. 88 Civ. 5141 (RLC), slip op.
at 17-18, 1989 WL 129504 (S.D.N.Y. Oct. 27, 1989). Neither
Marvel's other claims for breach of the Modification Agreement,
nor YAC's counterclaims for breaches of the Publishing,
Merchandising and T.V. Agreements could be resolved by summary
judgment. Accordingly, these matters were brought to trial
before the court on April 17-19, 1990.
At trial, Marvel sought to establish that YAC failed to
account for all monies due Marvel or for monies received by YAC
from McDonald's, Pepsi, Coleco and Quaker. There was no
disagreement as to the amounts received from each of these four
accounts, and it is also undisputed that YAC did not list the
disputed sums in the Modification Agreement. YAC contends,
however, that these sums were not required to be listed in the
Modification Agreement and that nothing is due Marvel from
these accounts. YAC further claims that Pepsi was not a
licensee and that Marvel knew about the Pepsi contributions in
any event; that the payments from Coleco post-dated the
Modification Agreement and, that although it did receive funds
on the day the Modification Agreement was signed, it was an
advance on an agreement with Coleco which was to become
operative subsequently; that the Quaker account which was
terminated with a payment $40,000 would have generated $250,000
to $500,000 but for Marvel's dilatory conduct in contract
negotiations, and; that nothing is due from the funds received
from McDonald's because Marvel failed to produce the promised
The threshold issue is whether the Modification Agreement
constituted a settlement of the parties' earlier agreements. In
its motion for summary judgment, Marvel asked the court to
construe the Modification Agreement as a settlement and release
with respect to the Merchandising and T.V. Agreements. This the
court declined to do at that time because the available facts
were conflicting. See, No. 88 Civ. 5141 (RLC), slip op. at
15-17 (S.D.N.Y. Oct. 27, 1989). These conflicts were resolved
at trial with the testimony of Joseph Calamari, executive vice
president of Marvel, and Wendell Butler, president of YAC, who
both stated that it was the intent of the parties that the
Modification Agreement settle their prior relationship. In the
words of Butler, the Modification Agreement was a settlement
"with respect to existing relationships" involving YAC, Marvel
and third parties. Transcript at 432.
"New York law requires that a release contain an `explicit,
unequivocal statement of a present promise to release defendant
from liability.'" Bank of America National Trust & Savings
Gillaizeau, 766 F.2d 709, 713 (2d Cir. 1985). The parties'
intent will determine the scope of the release, id., and no
particular form or language is required to manifest a release.
Pratt Plumbing and Heating, Inc. v. Mastropole, 68 A.D.2d 973,
414 N.Y.S.2d 783, 784 (3d Dep't. 1979). If ambiguities in the
document prevent a firm conclusion that it is a release,
additional evidence may be considered to resolve the issue.
Bank of America, supra, 766 F.2d at 714. Whether a document is
a release is a factual question and therefore extrinsic
evidence and oral testimony may be considered. Id.
Paragraph 4 of the Modification Agreement explicitly
terminates the Merchandising and T.V. Agreements and provides
that neither Marvel nor YAC shall have any further obligations
under either contract. Although there is no statement that the
Modification Agreement is a settlement, compromise or release
of prior claims under the two terminating agreements, the
principals involved in negotiating it testified that they
intended it to be a settlement. The primary function of the
court in interpreting a contract is to effect the parties'
purpose in coming to terms. Cromwell Towers Redevelopment Co.
v. Yonkers, 41 N.Y.2d 1, 6, 390 N.Y.S.2d 822, 826,
359 N.E.2d 333, 337 (1976) ("[a] fair and reasonable interpretation,
consistent with [the parties'] purpose, must guide the courts
in enforcing the agreement"); New York Bank for Savings ...