International Creative Management, Inc. v. D & R Entertainment Co.

Citations: 670 N.E.2d 1305; 1996 Ind. App. LEXIS 1103; 1996 WL 496765Docket: No. 49A02-9503-CV-121

Court: Indiana Court of Appeals; August 26, 1996; Indiana; State Appellate Court

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International Creative Management, Inc. (ICM) appeals the denial of its motion to compel arbitration in a breach of contract dispute with D. R Entertainment Co., Inc. and its partners. The appeal arises from three orders by the Marion Superior Court, all of which denied motions to compel arbitration under the Indiana Uniform Arbitration Act. ICM's appeal stems from the court's November 15, 1994, denial of its motion to compel arbitration and stay proceedings, as well as a March 10, 1995, order denying its motion for reconsideration. Concurrently, the Pebbles Defendants also appealed a February 22, 1995, order denying their petition to compel arbitration. 

D. R Entertainment, formed by Reginald Atkins, Willie Rhodes, and Ray Donaldson, was established to promote a July 11, 1991, concert, with Rhodes and Donaldson providing financial backing. ICM, an artist's agency, negotiated with D. R's concert promoter, George Valentine, for performances by the artists Pebbles, Hi-Five, and potentially Father M.C., agreeing on performance fees and stipulating contract delivery to Valentine. The case involves complex relationships among the parties and their roles in the concert promotion, highlighting ICM's position as an artist's agent in the dispute. The appellate court reverses the trial court's decisions and remands with instructions to compel arbitration.

The promoter customarily sends a good-faith deposit, typically half of the total price, to the artist's agent, who then checks the artist's interest and prepares an engagement contract if the artist agrees. The contracts, usually on the talent agency’s standard form, include standard terms on the reverse side and often an artist's rider detailing technical and personal requirements. Following this practice, Valentine instructed Donaldson to send deposits for artists Pebbles and Hi-Five, totaling $8,250, and an additional $2,000 for Father M.C. After the deposits were received, ICM sent engagement contracts to Valentine, who sought consensus with Atkins before signing. Subsequently, D. R Productions was formed to promote the concert independently, prompting the need for new contracts to reflect the promoter change. However, it was learned that Father M.C. could not perform, leading to the return of his deposit.

Warner forwarded the new contracts for Pebbles and Hi-Five to Atkins, directing immediate return to ICM. Although aware that the artists might not sign before the concert, Warner expected them to perform once ICM had the contracts. The contract required payment by certified means prior to performance, emphasizing that failure to comply would result in non-performance. Prior to the concert, a meeting was held with coliseum officials to pay the remainder owed to the artists. However, Pebbles was not paid entirely in cash as required, leading to the artists refusing to perform and the cancellation of the concert.

In December 1991, D. R Entertainment filed a lawsuit against the Pebbles Defendants, Hi-Five, Hi-Five Music, Inc., Father M.C., and ICM, alleging breach of an oral agreement for the concert on July 11, 1991. The complaint included claims for breach of contract and unjust enrichment. The Hi-Five Defendants were not part of the appeal, and a default judgment was entered against them on March 17, 1995, awarding D. R Entertainment $635,000 in damages.

The Pebbles Defendants and ICM filed separate motions for summary judgment, asserting that a June 28, 1991, contract (the "June 28th Reidstein Contract") was the controlling agreement. ICM also claimed it was acting as an agent for a disclosed principal. D. R opposed this, citing reliance on a June 20th oral agreement and provided affidavits, which ICM sought to strike due to contradictory deposition testimony from D. R, who had previously indicated that the June 28th contract was controlling. The trial court partially granted ICM's motion to strike and subsequently granted ICM's motion for summary judgment while denying the Pebbles Defendants' motion in January 1994. 

The Pebbles Defendants later amended their answer to include an affirmative defense of arbitration and filed motions to compel arbitration, which the trial court denied. After being denied, they did not appeal but sought to join ICM as a third-party defendant, leading to a third-party complaint filed on March 28, 1994. ICM then asserted the affirmative defense of arbitration in its answer. ICM filed its second motion to compel arbitration under Indiana’s Uniform Arbitration Act, but the court denied it, consistent with its previous ruling. 

In the following months, the Pebbles Defendants filed additional motions for summary judgment and motions to compel arbitration, all of which were denied. On March 9, 1995, ICM filed a motion for reconsideration regarding its earlier motion to compel arbitration, marking the fourth attempt, which was again denied by the trial court. This led to a joint appeal questioning whether the trial court properly denied the motions to compel arbitration. Central to the appeal is the determination of whether the June 28th Reidstein Contract or the June 20th oral contract governs. The June 28th contract includes an arbitration clause stipulating that disputes will be settled by arbitration in New York under the American Arbitration Association rules.

D. R sought dismissal of the appeal, arguing that the orders were neither final nor appealable and that the appeal was not timely filed. A motion to dismiss based on jurisdictional grounds was also filed after the appeals were joined. The appellate court previously rejected similar arguments regarding jurisdiction. In February 1996, the Chief Judge denied a motion to strike a portion of the appellants' brief concerning the motion to dismiss, indicating that the appellants were not required to include rearguments on that motion in their reply brief.

Appellants were given ten days to file a reply brief regarding the court's jurisdiction to review an order denying an application to compel arbitration under the Indiana Uniform Arbitration Act. Indiana Code 34-4-2-19(a) explicitly allows appeals from such orders, while 34-4-2-19(b) outlines the appeal process as similar to civil actions. D. R argues that an order denying a petition to compel arbitration requires certification under Appellate Rule 4(B)(6) to be appealable, citing cases related to granting petitions, which are not applicable here. The court finds that the order denying the petitions to compel arbitration is appealable as a matter of right, supported by similar statutes in other states adopting the Uniform Arbitration Act. 

D. R also claims that the appeals are untimely, arguing that the first petition filed on February 2, 1994, was denied without prejudice, and subsequent petitions were repetitive. The court disagrees, stating that the later petitions provided new factual evidence regarding the operative agreement, thereby making them substantively different and not an attempt to extend the appeal period. Thus, the appeals were deemed timely. 

On substantive grounds, D. R contends that the Pebbles Defendants are not bound by the written contract as they did not sign it. The court states that in cases where not all parties sign a contract, the intent of the parties, as determined by the contract's language, will dictate liability under the agreement.

All parties signing an agreement are presumed bound by it unless it is clear they intended otherwise. A standard clause in the relevant contract states it is not binding unless signed by all parties. The Pebbles Defendants did not sign the contract, leading D. R to argue that the arbitration provisions are not enforceable, and the trial court correctly denied motions to compel arbitration by ICM and the Pebbles Defendants. Arbitration requires a mutual agreement, and a party cannot be compelled to arbitrate without consent. Courts must first determine if an agreement to arbitrate exists before compelling arbitration and should only assess the validity of the contract containing the arbitration clause. The record does not support any oral agreement between D. R and ICM after June 20, 1991. The only existing agreement was the June 28th Reidstein contract, which D. R signed after its incorporation on July 3, 1991. Negotiations prior to June 20 were on behalf of George Valentine, not D. R or the individual plaintiffs. Warner's affidavit confirms that negotiations were not intended as legal agreements. Donaldson's role was limited to providing financial backing. The trial court disregarded parts of affidavits regarding oral agreements, and it is clear that all parties acted in accordance with the June 28th Reidstein contract, fulfilling obligations such as catering and technical requirements for the show, despite D. R's inability to meet payment terms.

True Warner, with prior experience at ICM, testified she was aware that artist Pebbles was on tour and likely unable to sign the contract before the show. However, she believed Pebbles would perform in Fort Wayne as per the written contract, which she and others considered to be the operative agreement. Promoter Valentine, having extensive experience, stated that a deal is not finalized until he receives a written engagement contract and noted that artists typically require cash or guaranteed payment, not uncertified checks. He emphasized that an artist's signature on the contract is often unnecessary if the promoter prepares for the concert according to the contract's terms, as he expected would happen for Pebbles's performance.

On November 15, 1994, the trial court denied ICM's motion to compel arbitration, indicating ICM did not establish the existence of a relevant agreement. Following this, Pebbles sought partial summary judgment, asserting the June 28th Reidstein Contract was the sole agreement, but her motion was denied. In March 1995, ICM filed for reconsideration regarding arbitration, which was also denied. The validity of a contract typically does not hinge on signatures unless specified, though some form of assent is necessary. The court referenced a New York case where actions indicating acceptance of modified terms were deemed sufficient. Similarly, it concluded that although Pebbles did not sign the contract, her conduct demonstrated acceptance of its terms, and D.R.'s actions reflected an intent to adhere to the contract despite the absence of Pebbles's signature.

Absence of a signed written agreement does not negate the existence of a legally binding contract in the music industry, especially when artists are on tour and unable to sign. Courts may consider industry practices as evidence in contract disputes, as illustrated in Poe v. Michael Todd Co. True Warner and Valentine indicated that it is common for artists to act as if bound by contract terms despite not signing due to touring schedules. Their performance under the contract serves as clear acknowledgment of a binding agreement. Consequently, the June 28th Reidstein Contract is deemed enforceable, supporting ICM and the Pebbles Defendants' claim of a written agreement to arbitrate as per Ind.Code 34-4-2-1 (1993). The court reversed and remanded the case for an order directing arbitration. Judges Chezem and Barteau concurred. The court addressed procedural issues related to the appeal, referencing Chesterfield Management, Inc. v. Cook, where a motion to dismiss appeal was denied, allowing for the reconsideration of issues for future guidance despite procedural complexities.