Back to the Future

(1985)   Tags: Universal

The Estate of John Z. DeLorean v. DELOREAN MOTOR COMPANY

In the 1970s, John Z. DeLorean founded the DeLorean Motor Company (“DMC”). DMC designed, manufactured, and sold an automobile named the DMC 12, which featured gull-wing doors. DMC ceased operations in 1979 and was subsequently dissolved through bankruptcy proceedings.

DMC may have gone defunct decades ago, but the DeLorean automobile remains culturally relevant in large measure due to Universal Pictures’s popular “Back to the Future” film series, which prominently features the DeLorean automobile. On March 14, 1989, Mr. DeLorean entered into an agreement with Universal. Under the Universal Agreement, Mr. DeLorean granted Universal certain exclusive “rights in and to the name and appearance of the DeLorean automobile in order to enable Universal to engage in certain merchandising and commercial tie-up activities in connection with the ‘Back to the Future’ films.”  In consideration for these exclusive rights, Universal agreed to pay Mr. DeLorean five percent of Universal’s “net receipts . . . from merchandising and commercial tie-ups in connection with the ‘Back to the Future’ films.”  The contract states that it “shall bind and inure to the benefit of [Mr. DeLorean’s] and [Universal’s] respective heirs, legal representatives, successors and assigns.”

Accordingly, upon Mr. DeLorean’s death in 2005, the Estate alleges that it succeeded to the rights under the Universal Agreement. The Estate alleges that Universal made some payments under the Universal Agreement but stopped doing so at a time unknown to the Estate. The Estate further alleges that Mr. DeLorean did not have a copy of the Universal Agreement at the time of his death and that the Estate therefore could not enforce Mr. DeLorean’s rights under it.

In 1997, DMC Texas purchased many of the assets sold in DMC’s bankruptcy.  In discovery during the 2014 action, the Estate became aware of the Universal Agreement. In February 2018, the Estate contacted Universal to determine the amount of royalties that Universal owed to the Estate under the Universal Agreement. The Estate claims that Universal represented that DMC Texas had indicated that it possessed the rights under the Universal Agreement and that the overdue royalty payments were remitted to DMC Texas instead of the Estate. The Estate alleges that in April 2018, counsel for DMC Texas threatened to bring a lawsuit against the Estate for tortious interference unless the Estate immediately retracted its request that Universal make royalty payments to the Estate under the Universal Agreement.

The Estate then commenced this action seeking: (1) a declaratory judgment that the Settlement Agreement does not grant DMC Texas any rights under the Universal Agreement and (2) an order directing DMC Texas to account for and pay to the Estate all money it had received from Universal under the Universal Agreement.

Judgment: The Settlement Agreement precludes the Estate’s claims in this action.