September 27, 2012 2:48pm PT by Eriq Gardner
Judge: Paramount Won't Lose Right to Make More 'Godfather' Films
A federal judge in New York on Thursday dismissed attempts by the estate of The Godfather author Mario Puzo to cancel a decades-old contract that gave Paramount film rights to his most famous book about a mafia family.
The decision wasn't a complete victory for Paramount, though: The judge refused to dismiss counterclaims brought by Puzo's family that contend Paramount breached a contract by preventing a new book sequel.
In February, Paramount sued after learning that the Puzo estate licensed a new book entitled The Family Corleone about Vito Corleone's rise to power in Depression-era New York. The studio believes its 1969 deal with Puzo gave it veto power and that the new book would “tarnish” the legacy of the Godfather film series. Paramount also asserted that it had reached an understanding with the estate in 2002 that would allow for one -- "but only one" -- sequel novel. That book, The Godfather Returns, was published in 2004.
In reaction, the Puzo estate, led by attorney Bert Fields, declared war on Paramount.
In March, counterclaims were brought wherein the estate attempted to terminate rights. The Puzo family believes an earlier 1967 agreement between the two sides expressly excluded and reserved "book publishing rights" for Puzo. Claiming breach of contract and tortious interference, the estate demanded some $10 million in damages and later sought cancellation of Paramount’s future rights to make more Godfather movies.
On Thursday, Judge Alison Nathan reviewed Paramount's motion to dismiss the counterclaims.
Paramount demanded that the breach of contract counterclaim be dismissed because it was pre-empted by federal copyright law. But the judge saw it differently, pointing to a recent 2nd Circuit Courts of Appeals decision involving Hayden Christensen for the differences between a contract claim and a copyright one. The judge wrote that "the estate seeks to enforce a right that, if it exists, arises out of the 1969 agreement and not out of copyright law," that the estate's claim "involves neither use nor copying" and that "the estate's claimed right is one that it has only against Paramount and not a right that it has against the world."
Thus, Paramount's pre-emption theory has failed, and the estate's contractual breach counterclaim survives for now.
But Nathan won't allow for any repudiation of the contract because whatever allegations that the estate has brought about Paramount allegedly dishonoring its 1969 deal, the judge says it "must be paired with an effort to escape performance of a contractual obligation."
Paramount's obligation was to pay Puzo $50,000, plus an additional possible $25,000 depending on sales of his book, and to credit him on the eventual film.
The judge wrote: "Even accepting the estate's position that the language stricken from the 1969 agreement indicates a reservation of book-publishing rights in Puzo, the estate can point to no express contractual provision in which Paramount agreed to refrain from litigation or from contesting the estate's interpretation of the rights granted and reserved under the contract. There is not, for example, an express covenant not to sue or otherwise interfere with each side's granted and reserved rights."
Nathan also denied an effort by the Puzo family to cancel the Paramount contract.
The estate told the judge that Paramount had refused to perform its obligations not to interfere with or injure its book publishing rights. But the judge considers the 1969 deal and the estate's own pleadings that stated there was no conveyance of book publishing rights. The judge said that assuming Paramount had an obligation not to interfere with book publishing, it has failed to adequately establish this obligation goes to the "essence" of the 1969 agreement.
Thus, the Puzo family can't cancel the contract, nor can it make a rescission. The judge further says, "The estate does not claim that it was unable to publish The Family Corleone, that the publishers failed to pay for such publication or that, if it ultimately prevails on its interpretation of the contract (i.e., that the 1969 agreement did not transfer book-publishing rights to Paramount), it will be unable to exercise its book-publishing rights into the future."
Finally, Nathan dismisses the Puzo estate's tortious interference claim against Paramount, pointing to the interim settlement the parties struck that allowed The Family Corleone to be published. In that settlement, funds from the book were agreed to be put in escrow pending the resolution of this litigation. The judge says that the escrow agreement can't form the basis of a tortious interference claim.
The lawsuit will proceed as the parties continue to fuss over the interpretation of the agreements that paved the way for the iconic Godfather franchise.
"Appeals would come at the end of the case," Fields says. "The main part of case remains to be tried. The trial court has allowed the estate’s breach of contract claim to go forward. We’re confident the 2nd Circuit will ultimately uphold the estate’s claim to cancel Paramount’s rights for Paramount’s breach."
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