## Facts

- Merry Gentleman, LLC produced the motion picture *The Merry Gentleman* (released 2009), starring and directed by Michael Keaton.
- Keaton contracted through George and Leona Productions, Inc., his loan-out company.
- The film was completed, accepted at the Sundance Film Festival, and received favorable critical attention, but it performed poorly commercially.
- Merry Gentleman sued in federal court under diversity jurisdiction for breach of the directing contract, alleging (among other things) late or incomplete cuts, lack of cooperation in post-production, interference with festival submission preferences, and inadequate promotion.
- On summary judgment, the district court assumed breach for purposes of the motion but held Merry Gentleman lacked evidence that the alleged breaches caused the claimed damages.
- On appeal, Merry Gentleman abandoned expectation damages and sought only reliance damages equal to the entire production budget (about $5.5 million).

## Issues

1. Whether a plaintiff seeking reliance damages under Illinois contract law must present evidence that the defendant’s breach caused the specific losses claimed.
2. Whether a plaintiff may recover the full cost of producing a completed, publicly exhibited film as reliance damages without evidence distinguishing losses caused by breach from losses attributable to market risk and other factors.
3. Whether substantial performance by the alleged breaching party affects the ability to treat the plaintiff’s entire investment as caused by discrete contractual breaches.

## Decision

- The Seventh Circuit affirmed summary judgment for George and Leona Productions, Inc. and Michael Keaton.
- Even assuming breach, Merry Gentleman failed to produce evidence from which a reasonable jury could find that the alleged breaches caused the film’s commercial failure or the claimed $5.5 million loss.
- The court rejected the attempt to use reliance damages to shift the ordinary commercial risk of a speculative venture to the alleged breaching party.

## Legal Principles

- Illinois contract remedies protect expectation or reliance interests, but either measure remains subject to ordinary limitations, including causation and foreseeability.
- Reliance damages aim to place the injured party in the position it would have occupied had the contract not been made; they are not a guarantee that a risky project would have succeeded.
- A plaintiff seeking reliance damages must show a causal link between the breach and the particular loss claimed; expenditures made “in reliance” are not automatically recoverable in full.
- Where the defendant substantially performed and the project was completed and distributed, a plaintiff cannot recover the entire investment as reliance damages without evidence that the alleged breaches caused that total loss.

## Conclusion

The court held that, under Illinois law, reliance damages require proof that the defendant’s breach caused the claimed losses, and a plaintiff cannot recoup an entire failed venture’s costs by relabeling the loss as reliance damages when the record lacks evidence tying the breach to the project’s commercial failure.


Merry Gentleman, LLC v. George & Leona Prods., Inc., 799 F.3d 827 (7th Cir. 2015)