Business Law Journal

Plaintiff VFLA Eventco, LLC (VFLA) paid $600,000 to Defendant Starry US Touring, Inc. (Starry US), $400,000 to Defendant Kali Uchis Touring, Inc. (Kali Uchis Touring), and $5 million to Defendant Big Grrrl Big Touring, Inc. (Big Grrrl) through Defendant William Morris Endeavor Entertainment, LLC (WME) (all collectively, the “Defendants”); for a total of $6 million in deposits to secure the performances of Ellie Goulding, Kali Uchis, and Lizzo, respectively, at VFLA's music festival scheduled for June 2020.

However, in March 2020, due to the spread of COVID-19 and in compliance with government restrictions, the music festival was cancelled. VFLA consequently demanded repayment of the deposits paid to Defendants under the force majeure provision of the parties’ performance contracts. While it was undisputed by the parties that COVID-19 triggered the force majeure provision, Defendants argued that they were entitled to keep the deposits under explicit terms which did not require a return if the artists were “otherwise ready, willing, and able to perform” but for the force majeure event.

The force majeure provision read in relevant part, as follows:

“A ‘Force Majeure Event’ means any act beyond the reasonable control of Producer, Artist, or Purchaser which makes any performance by Artist impossible, infeasible, or unsafe …. In the event of cancelation due to Force Majeure then all parties will be fully excused and there shall be no claim for damages, and subject to the terms set forth herein, Producer shall return any deposit amount(s) … previously received (unless otherwise agreed). However, if the Artist is otherwise ready, willing, and able to perform Purchaser will pay Producer the full Guarantee unless such cancellation is the result of Artist's death, illness, or injury, or that of its immediate family ….”

(See VFLA Eventco, LLC v. William Morris Endeavor Entertainment, LLC (Cal. Ct. App., Mar. 6, 2024, No. B323977) 2024 WL 959751, at *2.) The Court of Appeal had to decide whether “otherwise ready, willing, and able to perform” meant: (1) had the force majeure event not occurred, would the artists have been ready, willing, and able to perform (i.e. but for the force majeure); or that (2) the artists were required to show they were ready, willing, and able to perform regardless of the force majeure (i.e. in spite of the force majeure).

The Court of Appeal affirmed Defendants’ but for interpretation, because VFLA’s in spite of interpretation rendered the force majeure provision indefinite and incapable of being effected, while also rendering its third sentence mere surplusage. After all, the Court of Appeal queried, how could the artists be expected to show that they were ready, willing, and able to perform in spite of a force majeure event when a force majeure event was defined as any act making the artists’ performance “impossible, infeasible, or unsafe”? The but for interpretation instead protected the intention of the parties to allow Defendants to keep the deposits in at least some circumstances – which VFLA’s in spite of interpretation did not. The Court of Appeal held, accordingly, that the but for interpretation better conformed to statutory requirements that a contract be read to give meaning to each part of its provisions, which make it definite and capable of being carried into effect while reflecting the intention of the parties.

The Court of Appeal also affirmed that parol evidence (i.e., evidence outside the four corners of the contract) considered by the Court of Appeal tended to show the original draft of the force majeure provision (which favored VFLA) had been revised to become more artist-friendly; changing the requirement that the artist be paid in the event of a force majeure cancellation only if they “commenced performance”, to the requirement that the artist be paid in the event of a force majeure cancellation if they were “otherwise ready, willing, and able to perform”. While VFLA disputed the intent behind those changes, their subjective interpretations were deemed irrelevant -- as the objective intent, evidenced by the words of the contract, controlled the Court of Appeal’s interpretation of a contract in California. Consequently, the Court of Appeal found that the parol evidence also supported (even if just slightly) Defendants’ but for interpretation.

All of this just goes to show, while some may find the practice of carefully considering each word and phrase in a contract to be unnecessary, laborious, or overcautious, these efforts can have an outsized impact on the enforcement of your contract when push comes to shove. When drafting contracts, like so many other things in life, an ounce of prevention is worth a pound of cure. If you have any questions about your contracts, whether it involves review, drafting, or a dispute over a contract, please contact the authors or your usual counsel at Atkinson, Andelson, Loya, Ruud & Romo for a thorough discussion of how we can help.

This AALRR posting is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process. 

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