FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BEATRICE WELLES, 

Plaintiff-Appellant, No. 05-55742

v. D.C. No.

TURNER ENTERTAINMENT COMPANY;  CV-04-03077-JFW

ENTERTAINMENT ACQUISITION OPINION COMPANY, INC.,

Defendants-Appellees. 

Appeal from the United States District Court

for the Central District of California

John F. Walter, District Judge, Presiding

Argued and Submitted

April 16, 2007—Pasadena, California

Filed May 30, 2007

Before: Jerome Farris and Ronald M. Gould, Circuit Judges,

and Kevin Thomas Duffy,* District Judge.

Opinion by Judge Gould

*The Honorable Kevin Thomas Duffy, Senior United States District

Judge for the Southern District of New York, sitting by designation. 

6429
COUNSEL

Steven Ames Brown, San Francisco, California, for plaintiffappellant Beatrice Welles. 

David W. Quinto, Daryl M. Crone, Quinn Emanuel Urquhart

Oliver & Hedges LLP, Los Angeles, California, for

defendants-appellees Turner Entertainment Co. and Entertainment Acquisition Co. 

OPINION

GOULD, Circuit Judge: 

Beatrice Welles, the daughter of screenwriter, filmmaker,

and actor Orson Welles, filed suit against Turner Entertainment Co., Entertainment Acquisition Co., and other persons

not parties to this appeal (collectively, “the defendants”),

seeking a declaratory judgment that Beatrice Welles owns the

copyright and home video rights to the motion picture Citizen

Kane and seeking an accounting of the royalties she alleges

WELLES v. TURNER ENTERTAINMENT CO. 6433
she is owed from the profits of the motion picture. The district

court granted summary judgment for the defendants. Because

there are triable issues of fact, we vacate in part and remand.

I

The district court disposed of this case by summary judgment, so we consider the facts in the light most favorable to

Beatrice Welles. See Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 255 (1986). 

A

Several separate contracts between Orson Welles, Mercury

Productions, Inc. (a production company owned by Orson

Welles), and RKO Radio Pictures, Inc. are integral to this case.1

On July 22, 1939, Orson Welles, Mercury, and RKO signed

two agreements. The first agreement, between Mercury and

RKO (the “Production Agreement”), provided that “[RKO]

hereby engages [Mercury] to produce, direct and write the

screenplay for the two (2) motion pictures hereinafter

described, which are herein referred to as ‘the Pictures.’ ” 

Section 13 of the Production Agreement determines who

owns the fruits of the RKO-Mercury Production Agreement.

That section begins: 

[RKO] shall own the negative and positive prints of

each of the Pictures and all rights of every kind and

nature in and to each Picture, and all parts thereof

and all material, tangible and intangible, used

therein, as soon as such rights come into existence,

1Beatrice Welles is the sole successor in interest to both Orson Welles

and Mercury. According to Beatrice Welles’s complaint, the defendants

are the successors to the rights of RKO with respect to the contracts relevant to this appeal. 

6434 WELLES v. TURNER ENTERTAINMENT CO.
including, but not being limited to, the exclusive

rights of distribution, exploitation, manufacture,

recordation, broadcasting, televising (other than in

connection with the advertising or exploitation of a

commercial product or service), and reproduction by

any art or method, and the literary, dramatic, musical

and other works included in such Picture. . . . [Mercury] agrees that it will have no interest of any kind

in either of the Pictures, except as in this agreement

expressly provided. 

Section 13 concludes with what the parties call the “original story” provision. The provision states: 

In case of any original story written by [Mercury] or

any of its employees and used as the basis of either

Picture, however, [RKO] shall acquire the motion

picture and television rights in such story for such

Picture only. [RKO] shall not remake any such Picture unless [Mercury] produces or directs the same

or unless [RKO] buys the remake rights from [Mercury] at a price satisfactory to both parties. [Mercury] shall own the publication, radio, dramatic and

other rights in any such story but shall not use the

same in any way to compete with or injure the distribution of the Picture based on such story. 

The second agreement entered into on July 22, 1939,

between Orson Welles and RKO (the “Actor Agreement”),

provided that Orson Welles would play the leading male role

in the two motion pictures produced pursuant to the Production Agreement and that Orson Welles would receive compensation of $30,000 plus a percentage of the net profits of

the two motion pictures. 

On December 26, 1939, Orson Welles and RKO amended

the Actor Agreement by providing that Orson Welles would

act in a third film in addition to the two pictures already

WELLES v. TURNER ENTERTAINMENT CO. 6435
agreed upon. On January 14, 1941, Mercury and RKO entered

into another supplemental agreement, providing that the first

motion picture Orson Welles and Mercury would make for

RKO would be “based upon an original story, tentatively entitled ‘Citizen Kane.’ ” 

RKO released Citizen Kane on May 1, 1941. By December

15, 1944, Citizen Kane had not turned a profit, the second

film produced under the Production Agreement, entitled It’s

All True, was not finished, and production had not commenced on the third film described in the supplemental agreement. To end their business relationship, Mercury, Orson

Welles, and RKO entered into an agreement that terminated

the Production and Actor Agreements and their amendments

(the “Exit Agreement”). 

Signed on December 15, 1944, the Exit Agreement first

outlined the prior agreements between the parties. It then

stated: 

All fixed compensation payable to Mercury or

Welles for services in connection with the first two

motion pictures has been paid in full. Welles under

the agreements of the parties is entitled, as contingent compensation, to twenty per cent (20%) of the

net profits of the first two pictures as a unit. No net

profits resulted from the sale and distribution of the

first picture produced under the title “CITIZEN

KANE”, and accordingly Welles is entitled to no

contingent compensation. 

It is now the mutual desire of the parties to terminate

and cancel each and all of the existing agreements

between [RKO] and Mercury and between [RKO]

and Welles, and to mutually release and discharge

each party to each of said agreements from all rights,

duties, liabilities and obligations thereunder and

from all claims, demands and causes of action of

6436 WELLES v. TURNER ENTERTAINMENT CO.
every kind and nature of each party as against the

other party. 

The Exit Agreement also gave Orson Welles the option to

purchase from RKO for $200,000 all of the film recorded for

It’s All True. 

B

Beatrice Welles’s complaint in this case asserted four

claims. The first claim, seeking declaratory relief, alleged that

the Exit Agreement restored to Orson Welles the copyright to

the Citizen Kane2 motion picture and that, even if the Exit

Agreement did not restore all of Orson Welles’s rights to Citizen Kane, the Production Agreement did not provide the

defendants with the right to reproduce and distribute Citizen

Kane on home video. The second claim, also seeking declaratory relief, asserted that the Exit Agreement only extinguished

Orson Welles’s past claims against the defendants and did not

extinguish Orson Welles’s right to collect 20% of the profits

from Citizen Kane in the future, and, alternatively, that the

parties subsequently entered into a new agreement to share

the income from Citizen Kane. The third and fourth claims

sought damages for breach of contract and unfair business

practices, respectively. 

On December 6, 2004, the district court granted the defendants’ motion for summary judgment on Beatrice Welles’s

first, second, and fourth claims, and for partial summary judgment on the third claim. On appeal, Beatrice Welles only

argues that the district court erred in granting summary judg2

In the district court, Beatrice Welles claimed ownership of three of

Orson Welles’s motion pictures: Citizen Kane, Journey Into Fear, and The

Magnificent Ambersons. The summary judgment and this appeal, however, deal only with Beatrice Welles’s claims against Turner Entertainment Co. and Entertainment Acquisition Co. relating to Citizen Kane.

Beatrice Welles settled all of her other claims against all of the other

defendants. 

WELLES v. TURNER ENTERTAINMENT CO. 6437
ment on her first claim—seeking a declaratory judgment that

she owns the copyright and home video rights to the motion

picture Citizen Kane—and on her second claim—seeking an

accounting.

II

We review de novo the district court’s decision to grant

summary judgment. Olympic Pipe Line Co. v. City of Seattle,

437 F.3d 872, 877 n.11 (9th Cir. 2006). Summary judgment

is appropriate when there are no genuine issues of material

fact and the moving party is entitled to judgment as a matter

of law. Fed. R. Civ. P. 56(c). As noted above, in reviewing

a motion for summary judgment, we view the evidence in the

light most favorable to the non-moving party and draw all justifiable inferences in favor of that party. Anderson, 477 U.S.

at 255. 

III

Beatrice Welles first argues that there is a genuine issue of

material fact about who owns the right to distribute Citizen

Kane on home video. Before we address the merits of that

argument, we must first decide whether Beatrice Welles’s

claim of copyright ownership is barred by the statute of limitations. 

[1] A claim for copyright ownership is barred three years

from the “plain and express repudiation” of copyright ownership. Aalmuhammed v. Lee, 202 F.3d 1227, 1231 (9th Cir.

2000); see 17 U.S.C. § 507(b) (“No civil action shall be maintained under the provisions of this title unless it is commenced

within three years after the claim accrued.”). The defendants

argue (and the district court agreed) that because Beatrice

Welles knew since 1991 that the defendants were releasing a

home video version of Citizen Kane, her complaint, which she

filed in 2003 and in which she seeks a declaration that she

owns the home video rights to Citizen Kane, is time barred.

6438 WELLES v. TURNER ENTERTAINMENT CO.
[2] However, the defendants point to no evidence that,

before this litigation commenced, they plainly and expressly

repudiated Beatrice Welles’s claim to ownership of the home

video rights to Citizen Kane. The evidence the defendants cite

as notice that they were exploiting home video rights in Citizen Kane is correspondence between the attorneys for the

Estate of Orson Welles and the defendants regarding the

inclusion of the Citizen Kane screenplay in a “home video

collector’s edition gift set.” While this might have informed

Beatrice Welles that the defendants were distributing Citizen

Kane on home video, it is not the plain and express repudiation of copyright ownership that our case law requires for the

statute of limitations on a copyright ownership claim to begin

running. See Zuill v. Shanahan, 80 F.3d 1366, 1369 (9th Cir.

1996) (explaining that claims of copyright co-ownership “accrue when plain and express repudiation of co-ownership is

communicated to the claimant”). Beatrice Welles’s claim is

not time barred. 

We next turn to the merits of Beatrice Welles’s claim that

she owns the copyright to Citizen Kane on home video. Her

complaint sought a declaration that she “alone owns all publication, radio, dramatic, home video and other rights in the

story of Citizen Kane” and “that Mercury did not grant to

RKO any right to exploit through home video devices sold to

the public, the story of Citizen Kane as expressed in the

screenplay and as embodied in the motion picture produced

by Mercury of the same name.” Citizen Kane was an “original

story” written by Mercury. Thus, whether RKO or Beatrice

Welles owns the home video rights to Citizen Kane turns on

an interpretation of Section 13 of the Production Agreement.

[3] Because the Production Agreement contains a New

York choice of law provision, we apply New York’s principles of contract interpretation in deciding this issue. While our

task in a contract case is usually to give effect to terms of the

contract as the parties understood them, see Cromwell Towers

Redevelopment Co. v. City of Yonkers, 359 N.E.2d 333, 337

WELLES v. TURNER ENTERTAINMENT CO. 6439
(N.Y. 1976); Hartford Accident & Indem. Co. v. Wesolowski,

305 N.E.2d 907, 909 (N.Y. 1973); Hopkins v. Conn. Gen. Life

Ins. Co., 121 N.E. 465, 466 (N.Y. 1918), in this case it is

unlikely that, in 1939, Mercury or RKO gave any thought to

who would own the home video rights to Citizen Kane. In

such a case, we look for the meaning that reasonable persons

in the positions of the parties would have attached had they

thought about the matter. See E. Allen Farnsworth, Contracts

465-66 (3d ed. 1999). As one New York court has explained:

[F]aced with what may be . . . a failure to anticipate

the future situation which arose, a court is faced not

so much with the function of interpreting language

as the parties intended, for their intention was

incomplete, but of construing the language to accord

with what would have been the intention and the

honorable agreement of the parties if their attention

had been drawn to the possible events as they actually were to occur. 

Herbert Rosenthal Jewelry Corp. v. St. Paul Fire & Marine

Ins. Co., 249 N.Y.S.2d 208, 214 (N.Y. App. Div. 1st Dep’t

1964); see also Empire Props. Corp. v. Mfrs. Trust Co., 43

N.E.2d 25, 28 (N.Y. 1942) (“The intention of the parties must

be sought for in the language used. To understand the language, we may put ourselves in their place and discern if possible the objects they had in view, and the motives which

dictated their choice of words. A wider meaning may thereby

be disclosed.” (internal quotation omitted)).

In interpreting the Production Agreement, we first determine whether its language is ambiguous or reasonably susceptible to more than one interpretation. If the language is

unambiguous, we give effect to its plain meaning. Nichols v.

Nichols, 119 N.E.2d 351, 353 (N.Y. 1954). If the language is

ambiguous, or susceptible to more than one reasonable interpretation, we may consider extrinsic evidence in interpreting

the agreement. Hartford Accident & Indem. Co., 305 N.E.2d

6440 WELLES v. TURNER ENTERTAINMENT CO.
at 909. The interpretation of a contract is a question of law

that we may decide unless the interpretation depends on the

credibility of extrinsic evidence, in which case the interpretation of the contract is the task of the factfinder. Mallad

Constr. Corp. v. County Fed. Savs. & Loan Ass’n, 298 N.E.2d

96, 99-100 (N.Y. 1973). 

[4] To display publicly or distribute Citizen Kane, the

defendants need two rights: First, the defendants need the

right to display the motion picture. Second, because a motion

picture is derived from its underlying screenplay, the defendants need the right to exploit the screenplay. 

[5] In this case, the first paragraph of Section 13 deals with

the first right the defendants need to distribute Citizen Kane

on home video—the right to display the motion picture. Section 13 gives RKO “all rights of every kind and nature . . .

including, but not being limited to, the exclusive rights of distribution, exploitation, manufacture, recordation . . . and

reproduction by any art or method” in the motion pictures

produced under the Production Agreement. This tells us that,

as a general matter, the defendants, as successors to RKO,

have the right to exploit in any manner the motion pictures

produced pursuant to the Production Agreement, including

Citizen Kane. 

[6] However, to distribute Citizen Kane on home video, the

defendants still need the right to exploit the screenplay from

which the Citizen Kane motion picture was derived. The original story provision deals with this issue. As noted above, the

provision states that Mercury retained the rights to any

screenplay written by Mercury or its employees. So, in order

to allow RKO to display motion pictures derived from those

screenplays, the Production Agreement provided RKO with

certain rights in the “original stories” on which those motion

pictures were based. Specifically, RKO acquired “the motion

picture and television rights in such stor[ies] for such Picture[s] only,” and Mercury reserved ownership of “the publiWELLES v. TURNER ENTERTAINMENT CO. 6441
cation, radio, dramatic and other rights” in those original

stories. 

[7] Thus, the question before us is whether the defendants’

“motion picture and television” rights in the Citizen Kane

screenplay encompass the right to distribute the Citizen Kane

screenplay on home video. On one hand, a reasonable argument can be made that distributing a motion picture on home

video is simply an exploitation of the defendants’ “motion

picture” rights in the Citizen Kane screenplay. On the other

hand, such a broad interpretation would render the additional

grant of “television rights” to the defendants superfluous

because if “motion picture” rights encompassed home video

rights, “motion picture” rights could also be argued to encompass the right to display Citizen Kane on television. Thus, it

seems to us unclear whether the parties would have intended

RKO’s motion picture and television rights in the Citizen

Kane screenplay to include the right to exploit the Citizen

Kane screenplay in home video form. 

We dealt with a similar situation in Cohen v. Paramount

Pictures Corp., 845 F.2d 851 (9th Cir. 1998). In that case, in

1969, a composer granted a license to the producer of a

motion picture to use the composer’s copyrighted music “for:

(a) The exhibition of said motion picture . . . to audiences in

motion picture theatres and other places of public entertainment where motion pictures are customarily exhibited” and

“(b) The exhibition of said motion picture . . . by means of

television . . . , including ‘pay television’, ‘subscription television’ and ‘closed circuit into homes’ television.” Id. at 853

(alterations in original, internal quotation omitted). The

license reserved to the composer “all rights and uses in and

to said musical composition, except those herein granted to

the Licensee.” Id. The district court had granted summary

judgment to the producer, concluding that the licence’s grant

of the right to exhibit the picture “by means of television”

included the right to distribute the picture on home video, but

we reversed. Id. at 855. We emphasized that “VCRs for home

6442 WELLES v. TURNER ENTERTAINMENT CO.
use were not invented or known in 1969, when the license

was executed” and noted the dissimilarities between display

of a motion picture on television and distribution of a motion

picture on home video, and we also pointed out that the

license did not directly address which party owned the right

to exploit music in media that had not yet been invented. Id.

at 854. 

[8] This case is similar to Cohen. Home video was not

invented when the parties signed the Production Agreement in

1939, the right to distribute Citizen Kane on home video is

quite different from the right to display Citizen Kane on television, and the Production Agreement does not specify who

owns the right to exploit original story screenplays in media

that had not been invented in 1939. Perhaps most importantly,

the rights RKO acquired by license in the Citizen Kane

screenplay were quite narrow, encompassing only motion picture and television rights, just as the producer in Cohen

obtained the right to use the composer’s music only in theaters and on television. Mercury, on the other hand, retained

broad rights in the screenplay: publication, radio, and residual

“other rights,” just as the composer in Cohen retained “all

rights” not granted to the producer. Had Mercury granted

RKO sweeping rights in the screenplay and only retained

minimal rights for itself, we might be able to distinguish

Cohen and conclude that, had RKO and Mercury thought

about the matter of home video rights, they would have vested

those rights in RKO. But, in light of the narrow scope of

rights granted to RKO and the broad reservation of rights by

Mercury, we cannot conclude with certainty that the parties

would have given RKO home video rights had they contemplated the issue. We hold that the contract is ambiguous

regarding which party owns the right to exploit the Citizen

Kane screenplay on home video. 

Because we cannot discern, from the Production Agreement alone, what the parties in this case would have agreed

upon had they known that some day Citizen Kane would be

WELLES v. TURNER ENTERTAINMENT CO. 6443
distributed on home video, we turn to extrinsic evidence to

aid our interpretation of the contract. See Hartford Accident

& Indem. Co., 305 N.E.2d at 909. 

[9] Beatrice Welles offers an expert declaration stating that

[a]s of 1939, the term ‘motion picture and television

rights’ was a term of art used in motion picture contracts. At that time this term meant the exhibition of

a motion picture in theatres and contemplated broadcast by television, although at that time television

was not yet a viable commercial market. In 1939 the

use of the term ‘motion picture and television rights’

did not include a grant of the right to make copies of

a motion picture, embody such copies in home video

devices, and to sell such copies to the public.

We cannot judge the credibility of this declaration on an

appeal of summary judgment. See Mallad Constr. Corp., 298

N.E.2d at 99. Because there is a genuine issue of fact about

whether the parties intended the Production Agreement’s

grant of “motion picture and television rights” to RKO to

allow RKO and its successors to distribute Citizen Kane on

home video, and because the contract’s interpretation may

turn on the credibility of extrinsic evidence, we vacate the district court’s summary judgment on Beatrice Welles’s claim

for a declaration of home video rights and remand for further

proceedings.3

3Beatrice Welles has requested that we take judicial notice of a certificate of recordation filed with the United States Copyright Office. The certificate indicates that Entertainment Acquisition Co. quitclaimed to

Beatrice Welles any interest it had in the Citizen Kane screenplay.

Because we remand this case to the district court to determine as a factual

matter, who owns the right to exploit the Citizen Kane screenplay on home

video, we DENY the request. 

6444 WELLES v. TURNER ENTERTAINMENT CO.
IV

Beatrice Welles next argues that the Exit Agreement, which

“cancelled and terminated” the Production Agreement,

returned the Citizen Kane motion picture copyright to Mercury. In other words, Beatrice Welles argues that the Exit

Agreement rescinded the Production Agreement. 

[10] Before addressing the merits of this argument, we

must first confront a choice-of-law issue raised by the parties.

Unlike the Production Agreement, which contains a New

York choice-of-law clause, the Exit Agreement has no choiceof-law provision. Beatrice Welles argues that we should apply

New York law to interpret the Exit Agreement; the defendants

encourage us to apply California law. 

[11] As a federal court exercising diversity jurisdiction, we

apply California’s choice-of-law principles to determine the

body of substantive law that applies to our interpretation of

the Exit Agreement. See Klaxon Co. v. Stentor Elec. Mfg. Co.,

313 U.S. 487, 496 (1941). Absent an express choice of applicable law by the parties, “[a] contract is to be interpreted

according to the law and usage of the place where it is to be

performed; or, if it does not indicate a place of performance,

according to the law and usage of the place where it is made.”

Cal. Civ. Code § 1646. When the contract does not expressly

specify a place of performance, as is the case with the Exit

Agreement, the place of performance is the jurisdiction in

which the circumstances indicate the parties expected or

intended the contract to be performed. Burr v. W. States Life

Ins. Co., 296 P. 273, 275 (Cal. 1931). The Exit Agreement

concerned the rights in motion pictures made by Orson

Welles and Mercury at RKO’s studio in California. We apply

California law. 

[12] As noted above, the Exit Agreement stated that it was

“the mutual desire of the parties to terminate and cancel” their

prior agreements. Beatrice Welles argues that this language

WELLES v. TURNER ENTERTAINMENT CO. 6445
rescinded the parties’ prior agreements and thus returned any

right Orson Welles and Mercury had in the Citizen Kane

motion picture to them. However, under California law, it

seems that “terminate” and “cancel” mean something different from “rescind”: 

The words ‘terminate,’ ‘revoke’ and ‘cancel,’ . . . all

have the same meaning, namely, the abrogation of so

much of the contract as might remain executory at

the time notice is given, and must be sharply distinguished from the word ‘rescind,’ . . . which conveys

a retroactive effect, meaning to restore the parties to

their former position. 

Grant v. Aerodraulics Co., 204 P.2d 683, 686 (Cal. Dist. Ct.

App. 1949). Thus, under California law, the Exit Agreement

prospectively terminated and cancelled Orson Welles’s right

to royalties, but did not retroactively rescind RKO’s copyright

in the Citizen Kane motion picture unless RKO’s copyright

remained executory at the time of the Exit Agreement. 

Beatrice Welles points to language in the Exit Agreement

providing that the parties “mutually release and discharge

each party to each of said agreements from all rights, duties,

liabilities and obligations thereunder.” Beatrice Welles argues

that, pursuant to this provision, RKO “released” its “right” to

the Citizen Kane motion picture. Because Beatrice Welles

does not offer any extrinsic evidence in support of her favored

interpretation, the contract’s interpretation is a question of law

that can be decided by this court. See LaCount v. Henzel

Phelps Constr. Co., 79 Cal. App. 3d 754, 770 (Cal. Ct. App.

1978). 

[13] As noted above, under California law, a termination or

cancellation of a contract abrogates only executory rights held

under the terminated and cancelled contract. In this case,

RKO owned the Citizen Kane motion picture copyright as

soon as the motion picture was created. The Production

6446 WELLES v. TURNER ENTERTAINMENT CO.
Agreement states that RKO “shall own the negative and positive prints of each of the Pictures and all rights of every kind

and nature in and to each Picture . . . as soon as such rights

come into existence.” RKO, not Orson Welles or Mercury,

initially registered the copyright to the Citizen Kane motion

picture. Under the parties’ agreements, RKO had always

owned the motion picture copyright, and it had no executory

right in the motion picture to release at the time the parties

signed the Exit Agreement. 

[14] As a further argument that the Exit Agreement retroactively rescinded the copyright RKO owned pursuant to the

Production Agreement, Beatrice Welles cites cases holding

that a second contract between the same parties “completely

covering the same subject matter . . . so that the two [contracts] cannot stand together” rescinds the prior contract. See

Harrison W. Corp. v. United States, 792 F.2d 1391, 1393 (9th

Cir. 1986); Housekeeper Publ’g Co. v. Swift, 97 F. 290, 294

(8th Cir. 1899). However, that doctrine only applies when the

two contracts seek the same performance on different terms

and, hence, the contracts “cannot stand together.” See Harrison, 792 F.2d at 1393 (holding that a second contract to complete an irrigation project rescinded the original contract to

construct the project); Housekeeper, 97 F. at 294 (resolving

conflict between “two contracts between the same parties for

the sale of the same property”). Here, the two contracts are

not in irreconcilable conflict. Rather, the second contract simply and explicitly cancels and terminates the first. 

[15] The district court properly granted summary judgment

to the defendants on the issue of ownership of the copyright

to the Citizen Kane motion picture. 

V

[16] Beatrice Welles also seeks an accounting for the compensation she alleges she is entitled to under the Actor Agreement signed by Orson Welles. The Actor Agreement provided

WELLES v. TURNER ENTERTAINMENT CO. 6447
Orson Welles compensation of $30,000 plus 20% of the net

profits of Citizen Kane. In 1944, the parties signed the Exit

Agreement, which noted that Orson Welles was not entitled

to any contingent compensation and further stated the parties’

desire to terminate and cancel all of their existing agreements,

including the Actor Agreement. The parties do not dispute on

appeal that this language from the Exit Agreement prospectively ended Orson Welles’s right to contingent compensation

under the Actor Agreement. 

Beatrice Welles, however, argues that there is conflicting

evidence about whether Orson Welles and RKO entered into

another agreement, after the Exit Agreement, to share the

profits of Citizen Kane. Beatrice Welles notes that, after 1944,

RKO and Orson Welles jointly contracted to license the publication rights to the Citizen Kane screenplay to Bantam Books,

Inc. Beatrice Welles also points out that, in 1989, the defendants licensed the stage rights to the Citizen Kane screenplay

to Fifth Avenue Productions, Inc. Beatrice Welles argues that

the defendants’ right to license the Citizen Kane screenplay is

evidence of a quid pro quo—that is, in exchange for the right

to license the screenplay, Beatrice Welles urges us to infer

that the defendants granted Orson Welles the right to share in

the profits of Citizen Kane in some as-yet-unidentified agreement. Because this is a “justifiable inference[ ],” we make it

on summary judgment. Anderson, 477 U.S. at 255. This inference is supported by the fact that Orson Welles’s name

appears on RKO’s post-1944 schedules of persons who had

royalty rights in Citizen Kane. 

The defendants argue that the “hypothesized” existence of

a post-1944 agreement is irrelevant because Beatrice Welles’s

second amended complaint only sought a declaration that she

was entitled to profit participation under the Actor Agreement. However, the second amended complaint alleges that

“the parties subsequently [i.e., after 1944] entered into a new

agreement to share their rights and income.” Beatrice Welles

thus adequately pled her claim for an accounting. 

6448 WELLES v. TURNER ENTERTAINMENT CO.
[17] The defendants also point out that the post-1944 conduct of the parties indicates that Orson Welles had no profit

interest in Citizen Kane. Specifically, the defendants point out

that Orson Welles’s attorneys had twice written RKO asking

for an accounting of the profits generated by Citizen Kane,

and RKO had twice told Orson Welles’s attorneys that the

Actor Agreement had been terminated. On the first occasion,

Orson Welles’s attorney responded by stating that he had

overlooked the Exit Agreement and that his inquiry was

“completely answered,” and, on the second occasion, Orson

Welles’s attorney did not respond. While this is evidence that

Orson Welles had no profit interest in Citizen Kane at the

time those letters were exchanged, it is not conclusive evidence that Orson Welles never had a post-1944 profit interest,

and must be weighed by the trier of fact against all other relevant evidence in assessing whether there was a subsequent

agreement to share the profits of Citizen Kane. 

[18] We vacate the district court’s summary judgment on

Beatrice Welles’s claim for profit participation and remand

the claim for further proceedings. Each party shall bear its

own costs on appeal. 

AFFIRMED IN PART, VACATED IN PART, AND

REMANDED.

WELLES v. TURNER ENTERTAINMENT CO. 6449