William Nye and Rabbit Ears Productions entered into an agreement in 1993 with Disney’s subsidiary Buena Vista Television LLC for 50 percent of the net profits from producing and distributing the television show starring Nye.
When Rabbit Ears defaulted on a loan secured by a lien on its assets, the company’s share of the show’s profits was sold to Microleague Multimedia Inc., a transfer that was reflected in an amended version of the agreement. When Microleague declared bankruptcy, its subsidiary, Ablesoft, emerged with all of Rabbit Ears’ rights.
Ablesoft has collected nearly $1 million over 15 years from Buena Vista.
Ablesoft and Nye, among others, sued Disney in Los Angeles Superior Court, alleging the company had failed to properly account for and pay profits from the television series. The parties alleged causes of action include fraudulent concealment, fraudulent misrepresentation, and breach of contract.
The trial court granted summary judgment to Disney on Ablesoft’s claims. The court found Ablesoft couldn’t show it had standing because its name was not on the profit agreement.
The California Court of Appeal, Second District, revived Ablesoft’s claims, finding it could show sufficient evidence that it was the successor-in-interest to Rabbit Ears.
In the amended agreement, Disney expressly agreed Microleague was a party to the contract as successor to Rabbit Ears, and Ablesoft produced sufficient evidence showing it was the same entity as Microleague, Justice Elwood Lui wrote in the unpublished opinion.
Disney also actually paid Ablesoft for years, including sending annual accounting and profit participation statements, apparently without any objection, Lui said.
That conduct is evidence that Ablesoft’s status as a party to the contract is a triable issue and the company’s claims can’t be dismissed yet, he said.
Justices Judith Ashmann-Gerst and Victoria M. Chavez joined the opinion.
Hamrick & Evans represents Ablesoft. Mitchell Silberberg & Knupp represents Walt Disney.
The case is Ablesoft Inc. v. Walt Disney Co., Cal. Ct. App., 2d Dist., No. B304155, unpublished 10/8/21.
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