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GENTIEU v. TONY STONE IMAGES/CHICAGO

August 28, 2003

PENNY GENTIEU, ET AL., PLAINTIFFS,
v.
TONY STONE IMAGES/CHICAGO, INC., ET AL., DEFENDANTS



The opinion of the court was delivered by: Milton Shadur, Senior District Judge

MEMORANDUM OPINION AND ORDER

This extensively (and hotly) contested action ended in almost total defeat for plaintiffs Penny Gentieu and her corporation Penny Gentieu Studio, Inc (collectively "Gentieu," treated as in earlier opinions as a singular feminine noun): Except for the recovery of unpaid license fees that defendants Tony Stone Images/Chicago, Inc. and Getty Images, Inc, (collectively referred to as in earlier opinions as "Getty," also treated as a singular noun) had been prepared to acknowledge and honor from the very beginning, this Court's lengthy March 26, 2003 memorandum opinion and order (255 P.Supp.2d 838, cited as "Opinion at — "*fn1) rejected all of Gentieu's massive claims as not only meritless but in principal part as frivolous.

With Gentieu having appealed that adverse decision, what remains for consideration are the parties' cross-motions for awards of attorneys' fees and expenses. This memorandum opinion [ Page 2]

and order deals with those claims.

Sources of Fee Shifting

Gentieu ties her proposed recovery of fees to the notion that she is "the prevailing Party" for purposes of the written agreement between the parties, 1993 Contract ¶ 12.8:

In any action to enforce the terms of this Agreement, the prevailing Party shall be entitled to recover their court costs, attorney's fees and other non-reimbursable expenses, such as expert witness fees and investigation expenses.
Although the partial recovery that Gentieu obtained related solely to what she lists as the "license fee recovery accounting/audit issue," she attempts to build up a claimed recovery of over $133,000 in the fashion reflected in the parties' joint statement submitted pursuant to this District Court's LR 54.3(e)(see Ex, 1 to this Opinion).

For its part, Getty also invokes the "prevailing Party" provision of the 1993 Contract, pointing to its success in having torpedoed all of Gentieu's contract-based claims save one. Getty also seeks the shifting of fees in connection with its successful (and total) defeat of Gentieu's attempted copyright infringement claims, citing for that purpose the statutory provision in the Copyright Act (17 U.S.C. § 505 ("Section 505")):

Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs.
This opinion will first address the parties'opposing claims [ Page 3]

for fee awards under the 1993 Contract. It will then turn to a much shorter discussion of the Copyright Act issue, as to which Getty plainly has Gentieu dead to rights.

Breach of Contract Claims

Because the 1993 Contract refers to "the prevailing Party" (in the singular) in any enforcement action, one permissible approach to the litigants' claims would be to place their respective successes or failures in the scales and to award fees only to the one side in whose favor the scales tipped. That possible reading could be gleaned from what has been said in one or two of the cases cited by Getty on the subject. But a different approach of evaluating success in relation to each contract claim separately, and then awarding fees to the party that prevailed on that claim, seems more finely attuned to the purpose of the 1993 Contract's fees provision — and such a reading is also consistent with the treatment of attorneys' fees in Moriartv v. Svec. 233 F.3d 955, 963-68 (7th Cir. 2000), the most recent of the cases cited by Getty on the subject (at its Mem. 13).

Gentieu attempts to squirm out from under the consequences of either of those approaches by contending that her only breach of contract claim was the one seeking the payment of license fees that she ultimately collected when Getty agreed to them (as it had been prepared to do from the very outset). But that position [ Page 4]

seeks to rewrite the litigation history with a vengeance;

1. Gentieu expressly predicated her most serious claim — that of Getty's claimed breach of fiduciary duty — on the principal-agent relationship created by the 1993 Contract, which triggered fiduciary obligations on the part of agent Getty (see Opinion at 864-65). And Gentieu was a dead-bang loser on that claim, as to which Getty obtained summary judgment (id. at 866).
2. All of Gentieu's other claims also sounded in breach of contract, as Opinion at 866 (footnote omitted) clearly set out:
At long last the end is in sight. This opinion must finally address Gentieu's argument that Getty breached the 1993 Contract in three different ways: (1) that Getty's purported licensing improprieties, described above as exceeding the scope of the license, violated specific provisions of the contract, (2) that other conduct by Getty breached the contract's "best efforts" clause and (3) that all of those acts by Getty breached an implied covenant of good faith and fair dealing. Again the claims are addressed in turn.
And after the ensuing careful analysis of each of Gentieu's contentions, Opinion at 870 granted summary judgment in Getty's favor there as well.
There is thus no question but that Getty is a prevailing party — and under a permissible view as indicated earlier, the (in the sense of "only") prevailing party — as to all of Gentieu's [ Page 5]

1993 Contract claims other than the license fee matter (as to which Getty does not request any fee award). That having been said, this opinion — to minimize the extent to which any parsing of Getty's claims may be required — will defer translating that conclusion into a dollar award until after its discussion of the propriety of an award under Section 505.

But before this Court turns to that Copyright Act issue, it will review the only other breach of contract issue — a potential award to Gentieu on her license fee claim. In that respect, even though Gentieu certainly prevailed on that claim, her request for fees faces two major hurdles.

First, even apart from the question of characterizing her as "the prevailing Party" as a matter of contract interpretation where her recovery was so small in relation to her much larger claims that proved groundless (indeed, in substantial part wholly frivolous),*fn2 there is a serious problem with rewarding Gentieu by a shifting of fees — or at least any meaningful amount of fees — on that claim. As Opinion at 870 (footnote omitted) has said;

Although Gentieu had a legitimate claim for unpaid royalties under the 1993 Contract when this lawsuit was instituted, it is one that could have been resolved long since — and without the enormous expenditure [ Page 6]
(really a waste) of resources that has ensued — if she had not coupled that claim with contentions obviously ascribable to an overexaggerated sense of self-importance.
Less than a month after suit was filed here in January 2000, Getty's then counsel then offered to settle the entire matter through alternative dispute resolution, with an independent third-party auditor to be engaged to perform a financial audit of the parties' relationship, with the parties to divide the expense of the audit evenly, with the auditor's decision to be final and unreviewable judicially, and with each side to bear its own costs and fees, including attorneys' fees (see the marginally marked portion of Ex. 2). Because Gentieu was dead set on advancing the other claims on which she later suffered total defeat, she rejected that proposal.

About a year later, after Getty's present counsel had come into the case, they renewed a like offer — this time suggesting an auditor from Ernst & Young and offering to bear all of the costs of the audit (estimated at $50,000 to $60,000 plus expenses), even though the 1993 Contract had a different provision under which Gentieu was to bear the cost of an audit unless a disparity of 5% or more were to be revealed. That offer was rejected less than a week later on the ground ...


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