day the Modification Agreement was effectuated, YAC received
$275,000 from Coleco, described as an advance on the July 1st
Marvel accuses YAC of bad faith for negotiating with Coleco
while its exclusive licensing agreement was still in effect. I
do not believe the bad faith characterization is appropriate.
Calamari and Butler had agreed that it was best for the parties
to end their relationship and were in the process of
negotiating the terms of their divorce. The discussion and
agreement with Coleco simply recognized that YAC and Coleco
would have an agreement which would post-date the termination
of YAC's agreement with Marvel. In my view, YAC was not
obligated to wait until the settlement was signed and sealed
before it could discuss future relationships with third
YAC should have listed the pending Coleco agreement on the
Modification Agreement, as well as the $275,000 advance.
Perhaps fearful that it would be required to share the Coleco
funds with Marvel if the relationship was revealed, it failed
to disclose this information. Although this is in violation of
the Modification Agreement, it is not one entitling Marvel to
share in the Coleco proceeds.
The contract between Quaker and YAC was initiated by Marvel,
but because the contract negotiations were too protracted, a
situation for which YAC blames Marvel, the relationship was
broken off and Quaker paid YAC $40,000 in settlement. Since
this money was paid on a licensing contract made while Marvel
was YAC's exclusive agent, Marvel is entitled to its 10% fee.
Accordingly, Marvel is awarded judgment in the amount of $4,000
on this issue.
Marvel is also entitled to its attorneys' fees pursuant to
paragraph 8 of the Modification Agreement. In that paragraph,
YAC agrees to indemnify Marvel against all claims, including
attorney fees, arising out of a breach by YAC of "any
representation, warranty or covenant" contained in the
Modification Agreement. YAC clearly has been guilty of a number
of such breaches as detailed in the above discussion of the
McDonald's, Pepsi and Coleco issues.
Accordingly, Marvel is to present a detailed and specific
memorandum to the court detailing the attorneys' fees claimed.
YAC, on receipt of Marvel's memorandum, may submit opposition
papers. Marvel's papers should be filed three weeks after the
date the court's opinion is filed, and YAC's opposition papers
should be filed two weeks after service of Marvel's papers.
I am somewhat confused as to whether there is a claim by YAC
in re the Publishing Agreement. At any rate, even if Marvel
breached this agreement by failing to publish the required six
books, YAC's only recourse is termination of the agreement.
Accordingly, if there is any claimed breach of this agreement,
that claim is dismissed.
In sum, Marvel is awarded judgment in the total amount of
$185,547.40, plus interest of 9% from June 30, 1986. This award
is in addition to the $75,000 previously awarded to Marvel on
its Motion for Summary Judgment. In addition, Marvel is
entitled to attorneys' fees pursuant to paragraph 8 of the
Modification Agreement, the amount of this award to await the
indicated submissions by the parties.
IT IS SO ORDERED.
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