## Facts

- In 1958, film director William Wyler contracted with MGM to direct *Ben-Hur* for $350,000 plus 3% of gross receipts over $20 million.
- The contract limited payment of the percentage compensation to “annual installments not to exceed” $50,000.
- After the film’s success, substantial percentage compensation accrued; Wyler and successors received payments in $50,000 annual installments while a large unpaid balance remained subject to the cap.
- Wyler Summit Partnership, as successor to Wyler’s contractual rights, alleged the installment limitation was included solely at Wyler’s request for tax reasons and conferred no legitimate benefit on the studio.
- Wyler Summit alleged Turner (as successor to MGM) refused Wyler Summit’s attempt to waive the cap, retained the unpaid balance, and earned interest on deferred amounts.
- Wyler Summit sued for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and declaratory/reformation-type relief to permit acceleration or disregard of the cap.
- The district court dismissed under Rule 12(b)(6), reasoning the cap benefitted both sides and waiver required express contractual authorization.

## Issues

1. Whether the complaint plausibly alleged that the installment cap was solely for Wyler’s benefit and therefore could be unilaterally waived by his successor.
2. Whether Turner’s insistence on the installment cap, as alleged, could constitute breach of contract or breach of the implied covenant of good faith and fair dealing.
3. Whether unjust enrichment is available where an express contract governs the payment terms at issue.
4. Whether limitations or laches justified dismissal at the pleading stage based on the complaint.

## Decision

- The Ninth Circuit affirmed in part, reversed in part, and remanded.
- It held dismissal was improper as to certain contract-based theories because, accepting the pleaded facts as true, Wyler Summit plausibly alleged the installment cap was a unilateral protective provision subject to waiver.
- It held the complaint plausibly stated an implied-covenant claim based on alleged bad-faith use of the installment cap to deprive Wyler Summit of the benefits of the percentage compensation while Turner retained and profited from the deferred sums.
- It affirmed dismissal of unjust enrichment to the extent it sought equitable relief inconsistent with, or duplicative of, the express contract governing payment.
- It declined to sustain dismissal on statute of limitations or laches grounds where the bar was not clear from the face of the complaint.

## Legal Principles

- On a Rule 12(b)(6) motion, the court accepts well-pleaded factual allegations as true and dismisses only when no facts consistent with the complaint could entitle the plaintiff to relief.
- Under California contract law, a contractual provision alleged to exist solely for one party’s benefit may be waivable by that party without an express contractual waiver clause.
- The implied covenant of good faith and fair dealing prohibits using contractual performance or enforcement to frustrate the other party’s right to receive the agreement’s benefits; strict enforcement may be actionable if used in bad faith to obtain an unbargained-for advantage.
- Equitable unjust-enrichment relief is generally unavailable where an express contract governs the same subject matter and defines the parties’ rights and obligations.

## Conclusion

The Ninth Circuit allowed Wyler Summit to proceed on pleaded theories that the installment cap could be waived as a unilateral benefit and that Turner’s insistence on the cap could violate the implied covenant, while rejecting unjust-enrichment relief that conflicted with the governing contract and remanding for further proceedings.


Wyler Summit P’ship v. Turner Broad. Sys., Inc., 135 F.3d 658 (9th Cir. 1998)