Opinion
No. C3-02-843.
Filed December 24, 2002
Appeal from the District Court, Hennepin County, File No. CT02805.
Richard I. Diamond, Richard I. Diamond, P.A., (for appellant)
David Bradley Olsen, Henson Efron, P.A., (for respondents)
Considered and decided by Anderson, Presiding Judge, Toussaint, Chief Judge, and Willis, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellant challenges the district court order dismissing the action for failure to state a claim for which relief can be granted. Appellant argues (1) that a contract existed between it and the respondents, implied either in law or in fact, (2) that respondents breached the covenants of good faith and fair dealing, (3) and that respondents were unjustly enriched at the expense of the appellant. Appellant also argues that the district court erred by dismissing its claims without allowing appellant to amend its complaint. Because the complaint failed to set forth a legally sufficient claim for relief, we affirm the district court.
FACTS
When Jesse Ventura was campaigning for Governor of Minnesota in 1998, he contracted with North Woods Advertising, Inc. ("North Woods") to create a series of four television commercials promoting his candidacy. By written agreement, North Woods contracted with appellant Sound 80 to provide acting talent for those commercials. In casting two child actors for roles in three of the commercials, Sound 80 acted as a signatory to the American Federation of Television and Radio Artists Contract and the Screen Actors Guild (the Union Contract). The Union Contract specifically provides that no part of a television commercial may be used other than as a television commercial without prior bargaining and agreement to compensate the principal performers. The contract imposes fines and liquidated damages for unauthorized use with further penalties for public sale. The complaint alleges that Ventura, VMI, and JVVC knew the actors provided to produce the commercials would be subject to those agreements.
In July 1999, Sound 80 discovered that a video was released to the public entitled "We Shocked the World," subtitled "Citizen Jesse." The video is allegedly the "authorized video documentary" about Ventura and his campaign and victory. It was produced by gcf, Inc. (gcf) and incorporated all of the Ventura television commercials made by North Woods, and for which Sound 80 had provided union talent, without prior bargaining or payment to the principal performers, all allegedly in violation of the Union Contract. The videotape was sold to the public.
Jesse Ventura holds a currently registered and effective trademark on his name. VMI is responsible for licensing use of Ventura's name and image. The cover of the videotape states that the video itself is VMI officially licensed merchandise. gcf paid licensing fees for the rights to use the Ventura name and image in the video.
Commencing on December 1, 1999, and continuing thereafter the Union invoiced Sound 80 under the Union Contract for charges and mounting penalties based on the unauthorized use of the actors' performances in the video. Sound 80 in turn invoiced gcf, the video's producers, and each of the respondents. Thereafter, penalties and fees continued to accrue on a daily basis, and by July of 2000, the total amount invoiced by Sound 80 to gcf under the Union Contract was $38,484.74.
Sound 80 made demand for payment on defendants Ventura, VMI, JVVC and gcf. None of the defendants paid. In October of 2000, Sound 80 paid the charges and penalties levied under the Union Contract in order to "preserve its business reputation in the business community." In January 2002, Sound 80 commenced an action in Hennepin County District Court against Ventura, VMI, JVVC, gcf, and other defendants. Ventura, VMI and JVVC moved to dismiss the action as against each of them for failure to state a claim on which relief can be granted.
Pursuant to Minn.R.Civ.P. 12(e), the district court dismissed all of the claims against Ventura, VMI and JVVC for failure to state a claim upon which relief can be granted. Appellant challenges the district court's order for dismissal.
DECISION
In reviewing cases dismissed for failure to state a claim on which relief can be granted, the only question before the reviewing court is whether the complaint sets forth a legally sufficient claim for relief. Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997). Appellant stated five causes of action against respondents. All five were dismissed. Sound 80 appeals the dismissal of its claims for breach of contract implied in fact or in law, breach of the covenants of good faith and fair dealing, and unjust enrichment.
I. The trial court correctly found that the facts asserted by appellant were insufficient to support an action for breach of contract implied in fact or in law.
A. Contract implied in fact.
Appellant acknowledges that the facts support, at most, the existence of a contract implied in fact. Under Minnesota law, where there is no express contract between the parties, an enforceable contract may be implied in fact from the actions, or even the silence, of the parties. Roberge v. Cambridge Co-op Creamery Co., 248 Minn. 184, 189, 79 N.W.2d 142, 146 (1956). A contract implied in fact is one inferred from the circumstances and conduct of the parties. Id. For a contract to be implied in fact, the circumstances must "clearly and unequivocally" indicate the intention of the parties to enter into a contract. Webb Bus. Promotions, Inc. v. American Electronics and Entertainment Corp., 617 N.W.2d 67, 75 (Minn. 2000). There must be some evidence that the parties, by their conduct, intended to enter into a contract. Id. A contract implied in fact is in all respects a true contract requiring a meeting of the minds. Roberge, 248 Minn. at 188, 79 N.W.2d at 145.
Appellant acknowledges that it had no direct contract with any of the Ventura defendants. The basis for its contract implied in fact argument is Jesse Ventura's status as a member of the Union. Appellant seeks to have this court conclude that because Ventura is a signatory to the same Union contract as the actors in his commercials, he is obligated to reimburse appellant for any penalties assessed against it by the Unions if they arise from the secondary use of union actors in a production by others in which he was also a performer. We do not find a contract implied in fact. An awareness of actors' rights under a union bargaining agreement does not translate into an implied agreement by one union member to pay other union members if the producers of secondary works in which they appear fail to do so.
The plaintiff in a breach-of-contract action bears the burden of establishing all of the essential contractual elements, whether the claim is based on an express or implied contract. Industrial Rubber Applicators, Inc. v. Eaton Metal Prods. Co., 285 Minn. 511, 513 171 N.W.2d 728, 731 (1969); Gryc v. Lewis, 410 N.W.2d 888, 891 (Minn.App. 1987). There is no allegation that respondents were ever asked to enter into, did enter into, or otherwise even contemplated entering into, any agreement with Sound 80, let alone an agreement to reimburse appellant for penalties assessed against it by third parties arising from contracts appellant entered into with fourth parties. There was no mutual assent nor any of the other elements of a contract implied in fact and the district court was correct to dismiss the claim.
B. Contract implied in law
Appellant argues in the alternative that the facts support a contract implied in law. A quasi contract is not a contract in the legal sense. Roske v. Ilykanyics, 232 Minn. 383, 389, 45 N.W.2d 769, 774 (1951). It is an obligation raised or imposed by law and is independent of any real or expressed intent of the parties. Mjolsness v. Mjolsnes, 363 N.W.2d 839, 842 (Minn.App. 1985). The right to recover is governed by principles of equity. Id.
The essential elements of quasi contract are a benefit conferred upon the defendant by the plaintiff, appreciation by the defendant of such benefit, and acceptance and retention by the defendant of such benefit under such circumstances that it would be inequitable for him to retain it without paying the value thereof.
Acton Constr. Co. v. State, 383 N.W.2d 416, 417 (Minn.App. 1986) (citation omitted). The element of unjust enrichment is important to a determination of contract implied in law. Id.
Appellant argues that respondents were unjustly enriched by the production of this video. Although it is indeed possible that respondents benefited from the existence of the video,
unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others, but instead it must be shown that a party was unjustly enriched in the sense that the term "unjustly" could mean illegally or unlawfully.
First Nat'l Bank of St. Paul v. Ramier, 311 N.W.2d 502, 504 (Minn. 1981). Other cases have held that an action for unjust enrichment can be based on morally wrong conduct. Cady v. Bush, 283 Minn. 105, 166 N.W.2d 358 (1969); s ee also Klass v. Twin City Fed. Sav. Loan Ass'n, 291 Minn. 68, 70-72, 190 N.W.2d 493, 494-95 (1971) (affirming trial court's finding of unjust enrichment without a showing of fraud, mistake, or illegal or unlawful conduct); Anderson v. DeLisle, 352 N.W.2d 794, 796 (Minn.App. 1984) (holding an unjust enrichment claim may be found "where it would be morally wrong for one party to enrich himself at the expense of another").
In this case, there is no allegation that any of the respondents did anything illegal or unlawful. Simply, a video was made with permission and license from respondents. Respondents' enrichment was limited to the receipt of licensing fees in exchange for the use of Governor Ventura's name and likeness, and any possible benefit to Governor Ventura's reputation and public image. This does not qualify as illegal or unlawful. Further, receipt of licensing fees does not rise to the level of immoral for purposes of an unjust enrichment claim. The facts indicate that the agreement between respondents and the producers of the video was a legitimate business transaction. That gcf, a third party, failed to bargain for the use of the commercials and compensate the actors who appeared in them with residual payments does not implicate any of the respondents in any morally wrong behavior. We hold that no contract implied in fact nor a contract implied in law existed between the parties to this appeal.
II. The District Court did not err in dismissing appellant's action for breach of covenants of good faith and fair dealing.
Appellant attempts to make out a claim for breach of covenant of good faith and fair dealing but fails to do so. "In Minnesota , the implied covenant of good faith and fair dealing does not extend to actions beyond the scope of the underlying contract." In re Hennepin County 1986 Recycling Bond Litigation, 540 N.W.2d 494, 503 (Minn. 1995). As explained earlier, because we find no express or implied contract between appellant and respondents there can be no claim of breach of the implied covenant of good faith and fair dealing.
III. The District Court correctly found that there were insufficient facts to support a claim of unjust enrichment.
As discussed previously, unjust enrichment claims do not exist merely because one party benefits from another's effort or obligation. Instead, unjust enrichment requires that a party benefit in an illegal or unlawful manner or that morally wrong behavior led to the party's enrichment at the expense of another. First Nat'l Bank of St. Paul, 311 N.W.2d at 504; Cady, 283 Minn. 105, 166 N.W.2d 358. There is no claim of illegal behavior nor do the facts indicate that respondents' actions were immoral. gcf made a video about Jesse Ventura's life and campaign. Ventura holds a trademark on his name and image. gcf sought permission to use both his name and his image which was granted. Licensing fees were paid by the video's producers to VMI to obtain permission to use Ventura's trademarked name and image as well as any benefit that came from being represented in a positive light in a video sold to the public. Ventura and the other respondents were not responsible for the payment of residuals to other individuals included by gcf in the video when the campaign commercials were used. Ventura did not grant specific permission to use the commercials, nor the images of the child actors, but simply granted permission to use his image. The producers' use of the commercials without bargaining for the permission of the other actors featured in them may indicate morally wrong behavior on the part of some party, but not on the part of respondents in this appeal.
The district court correctly ruled that appellant failed to state a claim for unjust enrichment. We affirm.
IV. The district court did not err in dismissing the complaint with prejudice and failing to permit appellant to serve and file an amended complaint.
Appellant argues that it should have been permitted to amend its complaint. The district court has broad discretion to grant or deny leave to amend a complaint, and its ruling will not be reversed absent a clear abuse of discretion. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).
Appellant failed to make a motion to amend in the district court. In its memorandum of law in opposition to motion for dismissal, appellant suggested that it should be permitted to amend its complaint. Appellant never brought an actual motion, however. A reviewing court must generally consider "only those issues that the record shows were presented and considered by the trial court in deciding the matter before it." Thiele v. Stich, 425 N.W.2d 580, 582 (Minn 1998) (quotation omitted). Because no motion for amendment was ever brought before the district court, this court need not consider whether the trial court abused its discretion in dismissing the complaint without affording the appellant the opportunity to amend.
Appellant has failed to set forth a legally sufficient claim for relief against any of the respondents and the district court was correct to dismiss appellant's complaint with prejudice.