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GMSR’s clients, the creators and producers of the hit television show Home Improvement, sued Disney for underpaying their profit participation. Disney obtained summary judgment on the basis of an “incontestability clause” in its contract with plaintiffs that, Disney claimed and the trial court found, absolutely barred claims filed more than two years after Disney sent a profit participation statement. This, despite the plaintiffs’ factual showing that it was impossible for them to determine whether they had a claim under a particular participation statement without conducting an audit—and that Disney routinely delayed audits for many months or even years, so that it was impossible for plaintiffs to discover a claim within the two-year incontestability period.
The Court of Appeal reversed. It found triable fact issues as to whether Disney had agreed to toll the two-year incontestability period and as to whether, because of its consistent delays of plaintiffs’ audits, Disney waived or was estopped to assert the two-year period.
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