CBS, Inc. v. Merrick
United States Court of Appeals for the Ninth Circuit
716 F.2d 1292 (9th Cir. 1983)
CBS (plaintiff) agreed to buy television rights to a novel from Merrick (defendant), with a clause reverting rights to Merrick if photography hadn't started by August 1, 1979; CBS paid Merrick $916,666 and separately paid a director and screenwriter $750,000 whom Merrick hired, but Merrick knew the writers couldn't start immediately and failed to warn them of the deadline or hire additional help, causing the screenplay to remain unfinished and photography to miss the deadline. CBS sued for rescission and restitution; the trial court found Merrick breached the contract and awarded CBS restitution of the $916,666 but denied reliance damages for the $750,000 paid to the director and screenwriter.
Whether a party injured by breach of contract may recover both restitution of amounts paid to the breaching party and reliance damages for separate expenditures made in reasonable reliance on the contract.