Third Story Music, Inc. v. Waits

48 Cal. Rptr. 2d 747 (1995)

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Third Story Music, Inc. v. Waits

California Court of Appeal
48 Cal. Rptr. 2d 747 (1995)

SC
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Facts

Tom Waits (defendant) signed a contract with Third Story Music, Inc. (TSM) (plaintiff) that granted TSM the exclusive rights to market and distribute Waits’s music. TSM transferred its rights to Warner Communications, Inc. (Warner) (defendant). TSM retained the rights to royalties for any revenues from Warner’s sale of Waits’s music. The transfer agreement permitted Warner to refrain from exercising its rights to sell the music “at [its] election.” The transfer agreement also promised TSM a certain minimum amount of payment regardless of the extent of Warner’s marketing. TSM sought to create and sell an album of previously released Waits songs. Warner itself did not object but stated that Waits’s approval would also be required. Waits objected to the album’s release, resulting in Warner ultimately objecting to TSM’s request. TSM sued Warner for breach of the implied covenant of good faith and fair dealing. TSM claimed that Warner’s insertion of Waits’s required approval was not in good faith. The trial court ruled in Warner’s favor. TSM appealed.

Rule of Law

Issue

Holding and Reasoning (Epstein, J.)

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