## Facts

- Hollywood Fantasy Corporation sold “fantasy vacation” packages in which customers paid to participate in a weeklong, celebrity-associated movie-making experience.
- The company planned a May 1991 event in San Antonio featuring two celebrities, including Zsa Zsa Gabor.
- Hollywood Fantasy sent Gabor a March 4, 1991 letter agreement; Gabor signed and returned it with three handwritten changes.
- The agreement included a cancellation clause allowing Gabor to cancel if she obtained a “significant acting opportunity” conflicting with the event dates.
- About two weeks before the event, Gabor cancelled, claiming a qualifying acting opportunity.
- At the time of cancellation, Hollywood Fantasy had sold only two tickets for the San Antonio event.
- After Gabor cancelled, Hollywood Fantasy cancelled the event and soon went out of business.
- Hollywood Fantasy sued for breach of contract and fraud, seeking both out-of-pocket event expenses and forward-looking damages (lost profits and goodwill) based on projected future events and a contemplated television series.

## Issues

1. Whether Gabor’s handwritten changes were material so as to prevent contract formation absent separate acceptance.
2. Whether sufficient evidence supported the finding that Gabor’s cancellation was not excused by the “significant acting opportunity” clause.
3. Whether the $100,000 contract-damages award was supported by competent, non-speculative evidence, including claimed lost profits and goodwill.
4. Whether the district judge’s conduct required recusal and reversal for partiality.

## Decision

- The court affirmed liability for breach of contract, holding a contract was formed and substantial evidence supported the jury’s breach finding.
- The court reversed the $100,000 damages award as unsupported to the extent it reflected speculative lost profits and goodwill.
- The court rendered judgment for $57,500, limited to proven out-of-pocket reliance expenditures for the cancelled event.
- The court rejected the judicial-bias claim based on untimeliness and lack of record support.

## Legal Principles

- Minor, non-material modifications to a written offer do not prevent contract formation when the essential terms reflect mutual assent and the parties proceed on that basis.
- A jury’s resolution of whether a contractual excuse (such as cancellation for a specified opportunity) was satisfied will be upheld if supported by substantial evidence.
- Contract damages must be proven with reasonable certainty; speculative lost profits and goodwill, especially for a new or unproven business, are not recoverable on optimistic projections alone.
- Reliance damages may be awarded for proven expenditures incurred in preparation or performance, even when expectation damages are too uncertain, if the fact and amount are shown with sufficient specificity.

## Conclusion

The Fifth Circuit held Gabor liable for breaching her appearance agreement but limited recovery to $57,500 in proven reliance costs, rejecting the company’s speculative claims for future profits and goodwill and finding no basis for recusal.


Hollywood Fantasy Corp. v. Gabor, 151 F.3d 203 (5th Cir. 1998)