Artists Beware: You Could Be Liable for Serious Damages When You Breach a Contract!

News outlets are reporting that actress Evan Rachel Wood is being sued for $30,000,000 by 10 Things, LLC (“10 Things”), the producers of 10 Things I Hate About Life, a sequel to the movie 10 Things I Hate About You. Specifically, the Complaint alleges Wood agreed to film for seven weeks but refused to continue filming after performing for only four weeks (eleven days). It is also alleged that under the contract, Wood was paid $300,000 prior to commencement of production and that as a result of Wood’s refusal to film, 10 Things was forced to terminate production. Some commentators have criticized the amount of damages sought by the producers as exorbitant. However, the producers of the sequel may have a valid claim against Wood that may support its demand for $30,000,000 in damages.

Contrary to reports and comments, Wood’s net worth and ability to pay an award are not factors in determining the amount of damages to which 10 Things is entitled. If the allegations are true, under California law, Wood must compensate 10 Things for all damages proximately caused by, or likely to result from, her breach of the agreement. In California and many other jurisdictions, including Georgia, a party who breaches a contract must put the non-breaching party in the same position it would have enjoyed if the terms of the contract were fulfilled. Thus, the breaching party must reimburse the non-breaching party for costs and expenses incurred as a result of the breach, as well as lost profits. The Complaint states that Wood’s breach of contract caused a loss of $6,500,000 in investments, costs, and expenses, $20,000,000 in profits, and $5,000,000 in special damages. These figures are hardly as “preposterous” as Wood’s attorneys claim, since the production budget of the film’s prequel was $30,000,000 and it earned more then $53,000,000 worldwide.

Assuming 10 Things calculated its costs and expenses accurately, and made a good faith effort to reduce the economic effect of Wood’s breach, the court may find that Wood’s breach was, in fact, worth the $30,000,000 demanded.  Of course, this case is very likely to settle for much much less.