Dispute

Sondra Locke, with the assistance of ex Clint Eastwood, entered into an agreement under which Warner Bros. would entertain film pitches. Unknown to her, Eastwood was reimbursing Warner for their costs in exchange for not considering Locke’s films. Locke sued for sex discrimination, breach of the implied obligation of good faith, breach of contractual obligations, and fraud. The trial court granted Warner’s motion for summary judgment.

Rule of law

The implied obligation of good faith extends to discretion even in dealing with issues of artistic discretion. It may be fraud to enter into a contract with intent to breach it.

Arguments

The trial court, along with Warner, argued that because Warner had paid Locke the sums due under the contract, and because Warner had no obligation to make any of Locke’s films, there was no breach. It held that the questions of bad faith or fraud were barred because there was actual breach, and the only evidence of fraud was after the fact.

The appellate court, on the other hand, pointed out that simply paying the fees due under the contract were not enough because Warner had a good faith obligation to actually consider the films, and Locke had evidence they had failed to do so. It stated that it was bad faith for Warner to try to deprive Locke of the fruits of her contract and that she might have a claim for fraud based on the facts presented.

Conclusion

Reversed and remanded for trial.