The opinion of the court was delivered by: Renwick, J.
Richard Feiner & Co. Inc. v Paramount Pictures Corp.
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Angela M. Mazzarelli J.P. David Friedman James M. Catterson Dianne T. Renwick Leland G. DeGrasse, JJ. Index 110756/09
In this action we are asked to interpret a 1986 contract under which defendant's predecessor in interest purchased the rights to exploit 17 feature-length motion pictures produced in the 1940s and 1950s by Warner Brothers. On the one hand, defendant Paramount Pictures Corporation asks us to interpret the contract broadly as to permit defendant to exploit the 17 pictures through national cable deals. On the other hand, plaintiff Richard Feiner and Company Inc. asks us to interpret the contract narrowly to reserve to plaintiff, as the grantor, the exclusive right to exploit the 17 pictures in certain important local markets such as New York City. Applying cardinal principles governing the construction of contracts, namely that a written contract will be read as a whole and every part will be interpreted with respect to the whole, we reject plaintiff's interpretation of the contract and dismiss the complaint.
Plaintiff trades in the motion picture and television industries, including the production and licensing of movies. On September 17, 1986, plaintiff and Republic Pictures Corp. entered into an agreement for the sale of plaintiff's "rights, and interest of every kind, nature, and description throughout the Universe" in 17 pictures, including all copyrights, renewals and extensions of copyrights (the agreement) for $2,475,000. The 17 pictures are: Blood on the Sun, Bugles in the Afternoon, Johnny Come Lately, Kiss Tomorrow Goodbye, Mission in Morocco, Only the Valiant, Blowing Wild, Cloak and Dagger, Court Martial of Billy Mitchell, Distant Drums, The Enforcer, Marjorie Morningstar, My Girl Tisa, Pursued, Retreat, Hell!, South of St. Louis, and Three Secrets.
Defendant's rights in perpetuity with regard to the 17 pictures are listed in section 1(a) of the agreement, which provides as follows: "Subject to paragraphs 2 and 5 below, Seller [Feiner] hereby sells, grants, assigns and sets over to Purchaser [now Paramount], its licensees, successors and assigns, in perpetuity all of Seller's rights, and interest of every kind, nature, and description throughout the Universe (whether or not such rights, title or interest is now known, recognized or contemplated), if any, and the following "Elements" (hereinafter called "the Grant"): . . . (ii) all physical properties and property rights pertaining to each and every Picture; . . . (viii) all rights and property of every kind and nature belonging or pertaining to all of the foregoing, both tangible and intangible, including, but not limited to all copyrights, renewals and extensions of copyrights thereto, and to each and every part thereof."
Paragraph 2 of the agreement provides that the "foregoing Grant" was subject to certain retained rights. First, paragraph 2(a) provides that plaintiff retained all its rights in certain pre-existing licenses "pertaining to exploitation of the Pictures," which plaintiff or its predecessor had granted to local broadcast television stations as licensees: "(a) The Grant is subject to certain licenses pertaining to exploitation of the Pictures in existence as of January 1, 1986 between Seller [Feiner Co.] (or certain predecessors of Seller) and third parties (the Licenses') specified on Exhibit B annexed hereto. Seller retains all rights in and to such Licenses and all proceeds therefrom (subject to paragraph 3(a)(xiv) below) except that upon the expiration or sooner termination of any License, all rights granted thereunder shall revert to Purchaser including, without limitation, all rights to and rights of access to, any Film Materials subject to any such expired or terminated License."
The markets in which the licensees under the local Licenses operated were as follows: Altoona, Atlanta, Binghamton, Boston, Buffalo, Chicago, Cincinnati, Columbus, Cleveland, Dayton, Detroit, Fresno, Hartford-New Haven, Indianapolis, Los Angeles, Milwaukee, New York City, Philadelphia, Lebanon (PA), Toledo and Washington, D.C.
Second, pursuant to section 2(b)(vi) of the agreement, the grant of rights also excluded certain rights "reserved" by plaintiff, namely the right to exhibit, distribute and otherwise exploit the 17 pictures in certain languages in Germany, Austria, Switzerland, Lichtenstein, and Luxembourg. Likewise, section (2)(b) of the agreement provides that defendant "shall have no interest therein or claim thereon." No other geographic market is reserved to plaintiff, in either Paragraph 2 or any other provision of the agreement.
Defendant and its predecessors have exploited the 17 pictures for approximately 25 years. On June 6, 2007, however, plaintiff filed a demand for mediation before the American Arbitration Association, claiming that defendant had breached the agreement by "exploiting" the pictures in "territories" which were reserved by plaintiff. In a separate agreement dated November 1, 2007, the parties agreed to waive ...