A once-dismissed lawsuit filed by writer-producers of the ABC TV hit Home Improvement will be allowed to move forward again after an appeals court judge issued a new ruling today. The 2013 suit claims that Matt Williams, Carmen Finestra, David McFadzean, and companies including Tam O’Shanter Productions (which, perhaps ironically, shares a name with the famed Walt Disney hang out spot in Los Angeles) did not get their fair share of the $1.5 billion in profits the show’s syndication has earned for Disney.

Home Improvement

ABC’s “Home Improvement”

The Hollywood Reported explains:

The lawsuit was subsequently dismissed by a judge thanks to an “incontestability” clause in the contract that required an objection to profit participation statements within 24 months after the date sent and legal action initiated within 24 months after the date sent. A Los Angeles Superior Court judge granted Disney’s motion for summary adjudication on the ground that the producers’ claims were time-barred.

Today, the appeals court reverses.

Although appellate justice Laurie Zelon writes that parties to a contract may agree to a shortening of the statute of limitations, and that 24 months isn’t unreasonable or unconscionable, she finds that there are triable issues related to whether Disney waived the incontestability clause by orally agreeing to toll — or extend — the previously agreed-upon limitations period. This analysis differs from the trial judge who decided there needed to be an explicit written agreement in light of the profit deal between the parties that stated modifications needed to be in writing.

“The law is clear, however, that notwithstanding a provision in a written contract that expressly precludes oral modification, the parties may, by their words or conduct, waive the enforcement of a contract provision if the evidence shows that was their intent,” writes Zelon. “Accordingly, the no-oral-modification clause in the profit participation agreement did not preclude Disney from waiving other provisions in the agreement that were made for its benefit, including the time limitations in the incontestability clause. It also did not preclude Disney from orally agreeing to toll the limitations period for the Audit 4 and 5 statements that are the subject of this action while those audits were pending.”

Additionally, and with perhaps deeper implications for the controversies that often arise in Hollywood Accounting cases, the appellate court says there are also triable issues over whether Disney may be prevented from asserting the incontestability clause due to its conduct over the course of the parties’ relationship. The suing producers brought the argument that Disney could have asserted that audit claims were time-barred at a certain point, but that the company didn’t. Further, the producers presented evidence that Disney had a practice of delaying audits or only allowing one audit at a time such that they were unable to timely object.

Incidentally, this is the second piece of Disney lawsuit news to come out this week. Yesterday, a writer filed a suit claiming Zootopia was based on an idea he pitched to Disney years ago.

 
 

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