April 17, 2019. In Pettibone dba Lexor Music vs. WB Music Corp & Warner/Chappell Music, Inc, the Second Circuit Court of Appeals found in favor of Madonna co-composer Robert E. Pettibone in his dispute with WB Music Corp and Warner/Chappell Music (“Warner”) over the breadth of Pettibone’s indemnification obligation in his contract with Warner. Reversing the lower court decision, the Second Court found the language of the indemnification obligation (which required Pettibone to indemnify Warner for a claim jointly made against them up to the “amount of the deductible” of Warner’s errors-and-omissions policy) not applicable in the case where there the underlying claim against Pettibone and Warner was dismissed.
Adopting one of the arguments made in the expert report of Ty R. Sagalow, the court concluded that the indemnification section was “pock-marked with ambiguity and, in fact, more readily evinces an understanding between the parties that, in the absence of a breach, each party will shoulder its own attorney’s fees and costs.”
As a result of the court’s decision, Warner will be required to pay Pettibone the $500,000 it has wrongfully withheld from Pettibone’s royalties, plus legal interest, and Pettibone was not liable to Warner for approximately $1 million in defense costs reimbursement.
The full court decision is available here.
