## Facts

- Novelist Clive Cussler and related entities (collectively, Cussler) entered a 2001 Memorandum of Agreement with Crusader Entertainment, LLC (Crusader), granting Crusader option and purchase rights to make films from certain Cussler novels, including *Sahara*, as part of a planned film series.
- Before signing, Cussler had approved a screenplay for *Sahara* (the “Approved Screenplay”).
- The contract provided Crusader could not change the Approved Screenplay “without Cussler’s written approval exercisable in his sole and absolute discretion,” subject to limited carve-outs for customary on-set changes, changes required by production needs, and changes required by a completion-bond company.
- During development, Crusader sought screenplay changes and submitted more than two dozen revised drafts for Cussler’s review.
- Cussler repeatedly rejected the revised screenplays and, at times, refused to read or fully review drafts; he also sought to use a screenplay he wrote himself.
- Crusader and others involved in the project did not accept Cussler’s drafts, citing creative, budget, and industry constraints (including concerns tied to writer-related agreements and distributor opposition).
- Cussler sued Crusader for breach of contract and related claims arising from the parties’ deteriorating relationship and disputes over screenplay control and performance under the agreement.
- Crusader filed a cross-complaint that included a claim for breach of the implied covenant of good faith and fair dealing, arguing Cussler’s conduct in exercising his screenplay-approval power wrongfully interfered with Crusader’s contractual benefits.
- After a lengthy jury trial, the jury rejected most claims on both sides but found for Crusader on its implied-covenant claim and awarded $5 million in damages; the trial court entered judgment accordingly.
- Cussler appealed, challenging the legal basis for the implied-covenant verdict and also arguing he was entitled to affirmative monetary relief under the contract notwithstanding the jury’s rejection of his claims.

## Issues

1. Whether Crusader could recover for breach of the implied covenant of good faith and fair dealing based on Cussler’s refusal to approve screenplay changes when the contract gave Cussler “sole and absolute discretion” over such approval.
2. Whether Cussler was entitled on appeal to a money judgment in his favor under his contractual theories despite the jury’s verdict rejecting his affirmative claims.
3. Whether the judgment had to be modified on remand in light of the reversal of Crusader’s implied-covenant recovery, including any related prevailing-party consequences tied to the altered outcome.

## Decision

- The Court of Appeal affirmed the judgment to the extent it rejected Cussler’s affirmative claims against Crusader.
- The court reversed the $5 million judgment for Crusader on the implied covenant of good faith and fair dealing, holding the claim was barred as a matter of law because it conflicted with the contract’s express grant of “sole and absolute discretion” to Cussler over screenplay approval.
- The court declined to award Cussler the affirmative monetary judgment he sought on appeal.
- The matter was remanded for further proceedings consistent with the partial affirmance and partial reversal, including entry of a judgment reflecting that Crusader took nothing on its implied-covenant claim and any necessary follow-on determinations affected by the modified result.

## Legal Principles

- The implied covenant of good faith and fair dealing cannot impose obligations that contradict a contract’s express terms.
- When a contract grants a party “sole and absolute discretion” over a decision, an implied-covenant theory generally may not be used to convert that discretion into a duty to act reasonably or to approve requested changes.
- A verdict cannot stand where the only theory supporting liability is legally unavailable because it would rewrite the parties’ express bargain.
- On partial reversal, the trial court must enter a judgment consistent with the appellate disposition and address any remaining matters that depend on which party obtained the better net result.

## Conclusion

Because the parties expressly agreed that screenplay changes required Cussler’s written approval exercisable in his sole and absolute discretion, Crusader could not use the implied covenant of good faith and fair dealing to impose a reasonableness limit on Cussler’s refusals or to obtain damages for his exercise of that contractual right; the Court of Appeal therefore reversed Crusader’s $5 million implied-covenant award while otherwise affirming the rejection of Cussler’s affirmative claims and remanding for entry of a revised judgment consistent with that outcome.


Cussler v. Crusader Entertainment, LLC, 2010 WL 718007 (2010)