Wind Dancer Production Group v. Walt Disney Pictures

A contract providing for waiver of the discovery rule’s tolling of the limitations period is enforceable if the contract is between sophisticated parties.  A contract between Walt Disney Pictures and a sophisticated group of TV show producers contained a limitations clause, providing that Disney’s quarterly statements became conclusive 24 months after they were rendered as to all transactions “reflected therein” unless the producers objected in detail to the statements within 24 months.  This decision holds that the limitations period applied to all transactions whose results were summarized in a quarterly statement, and individual identification of the transaction in the report was not required. Also, the provision’s wording clearly waived any discovery rule tolling of the limitations period.  Waiver of discovery rule tolling is enforceable in a contract between sophisticated parties, particularly as the producers had the right to conduct annual audits to discover any improper accounting by Disney.  However, triable issues of fact remained as to whether Disney had orally waived the limitations clause as to particular audits that led to this suit and whether it is estopped from raising the limitations clause due to its not having raised the issue before despite audits occurring after the 24 month period or due to its conduct in delaying the audits that led to this suit.

California Court of Appeal, Second District, Division 7 (Zelon, J.); March 22, 2017; 2017 WL 1115060

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