It is almost inevitable that every practitioner in the entertainment field, whether in New York, Nashville, Los Angeles or points in between, will eventually encounter the predicament of dealing with a personal services contract which involves a contracting party under the age of eighteen. In an era where child movie stars and pre-teen recording artists are in ever increasing demand and wielding ever greater clout in the entertainment industry, the potential dilemma is that the minor may disaffirm the contract at any time during minority or upon reaching majority, thereby seriously jeopardizing the other party's financial investment in developing such an artist. The mere exercise of having the parent or guardian of the minor co-sign, approve or guarantee the contract does not resolve the problem; the minor may still disaffirm the contract on the ground of infancy, asserting that the parent or guardian lacked authority to make the contract.
Although the parameters of this article do not permit me to recite all the myriad procedural details, it is worthwhile for practitioners in the entertainment field to be aware of the relevant statutes concerning judicial approval of minors' contracts in New York, California and Tennessee.
New York law (1) provides for judicial approval of certain contracts for services of minors or "infants" under the age of 18. The provisions of the statute specifically relate to performing artists (such as actors, musicians and dancers) and professional athletes. The arduous procedure involved, however, can be expensive for the client and may prove to be a difficult gauntlet for the practitioner to run. Moreover, the probability of actually achieving court certification is discouragingly low. Many judges are wary of approving what are often incomprehensible contracts replete with the convoluted formulas and the impenetrable language of the entertainment business. It is understandable that a judge's trepidation with respect to certifying that a minor has adult responsibility for contractual obligations might be analogous to the reluctance a judge would experience when requested to declare someone judicially incompetent or insane.
As a practical matter, a proceeding for judicial approval of a minor's contract under New York's Arts and Cultural Affairs Law §35.03 is commenced by the filing of a verified petition. It can be filed by a parent, the guardian, a relative of the infant or any interested person on the infant's behalf.
The petition may be made to the Supreme Court or the Surrogate's Court in the county in which the infant resides. If a guardian has been appointed or qualified in New York then the petition should be made to the court in which the guardian was appointed or qualified. If the infant is not a resident of New York, then the petition may be filed in any county in which the infant is to be employed under the contract. In the event that the determination is made to file in the Supreme Court of a particular county, it is advisable to check with the clerk of the corresponding Surrogate's Court. The Surrogate's Court may require that special forms be completed and filed together with the petition to the Supreme Court, specifically with respect to appointment of a guardian.
A complete list of the information which must be included in the petition is set forth in Arts and Cultural Affairs Law §35.03(5)(a-k). The information required includes the name, residence and date of birth of the infant (§35.03(5)(a)) as well as whether the infant has had at any time a guardian appointed by will, deed or by a court (§35.03(5)(c)). The name and residence of any living parent, of the person who has care and custody of the infant, and the name of the person with whom the infant resides must also be set forth in the petition (§35.03(5)(b). This may be one and the same person or this may be three separate individuals. A brief statement as to the infants's employment and compensation under the contract or proposed contract is required (§35.03(5)(e). Most importantly, the petition must contain a statement that the term of the contract during which the infant is to perform or render services cannot extend for a period of more than seven years from the date of approval of the contract (§35.03(5)(f)). Despite the seven year limitation, certain covenants and conditions (e.g., re-recording restrictions) which extend beyond the seven year limitation may be approved if found to be reasonable.
The petition must also contain a statement of who, if other than the infant, is entitled to the infant's earnings and facts regarding the property and financial circumstances of the parent or parents so entitled (§35.03(5)(g)). The petition must also include a schedule showing the infant's projected "gross earnings", estimated outlays and estimated "net earnings", as such terms are defined in §35.03(3)(b) of the statute.
If no guardian of the infant has been appointed or qualified in New York, the petition must also request the appointment of a limited guardian. The petition may nominate a person to be appointed as guardian setting forth the reasons why the person nominated would be proper and suitable. A parent or other petitioner is not precluded from being appointed as limited guardian by reason of his or her interest in any part of the infant's earnings or in the contract, provided such interest is disclosed. The court also has the option to appoint a special guardian to represent the interests of the minor at any time after the petition is filed.
A complete copy of the proposed contract to be approved by the court must be annexed to the petition. Additional documents that should accompany the petition include written consent of the infant (if over the age of 14) and affidavits from the parents and guardian which consent to the petition, support the facts, and designate the clerk of the respective court as a person upon whom service of process may be made. In certain situations, it might be advisable for the attorneys who negotiated a particularly complicated contract to submit affidavits stipulating as to the substance of particular provisions of the contract. Furthermore, if a guardian is or has been appointed for the particular proceeding, a document known as a "Report of Guardian AdLitem" must also be filed with the petition.
Under the New York law, at least eight days before the time at which the petition is noticed to be heard, the following persons (other than the petitioner and anyone who has joined in the petition) must be served with an order to show cause why the petition should not be granted: (1) the infant; (2) the parents of the infant; (3) the infant's guardian(s); (4) each party to the contract; (5) any person having the care and custody of the infant; (6) the person with whom the infant resides; and, (7) the infant's spouse.
An order granting judicial approval of a contract for the services of a minor will rarely be granted on the papers alone.
A hearing will be commenced in which the infant, the parent(s) and the various other interested parties may be questioned by the judge regarding the contract. Oftentimes the court will also designate its own "experts" (usually lawyers not involved in the proceeding)
to review and analyze the terms and provisions of the contract. The cost of such court appointed lawyers is chargeable to the petitioner.
In the course of the proceeding, the court will also decide what portion of the net earnings of the infant are to be set aside. In fixing the amount to be set aside, the court will consider the financial circumstances of the parents entitled to the infant's earnings, the needs of the parents' other children and the needs of the infant's spouse, if married. Such amounts as are set aside are to be saved for the infant under guardianship until the minor becomes 18 years old.
As noted earlier, judges are often reluctant to approve contracts for the employment of a minor. Once the action is commenced, it could take anywhere from several weeks to several months for a decision to be reached. Numerous hearings may be required before the judge is satisfied that the contract should be approved.
In a recent proceeding which I handled in Supreme Court in Duchess County, New York, for approval of a personal management contact and a production agreement, the judge required three separate hearings. Despite affidavits from the attorney's who negotiated the contracts, he appointed an independent counsel as a court "expert" to review the provisions of the contracts. The proceedings extended over a period of eight months before approval was granted.
Once the court does grant approval, an order will be issued which will, in effect, declare the infant an adult for purposes of fulfilling his or her contractual obligations.
Keep in mind, however, that even after judicial approval of a contract, subsequent review may be made pursuant to an application made by the infant, a parent or the guardian. If the court determines after a hearing that the well-being of the infant is being impaired by the performance of the contract, it may at any time during the term of the contract order a modification of the contract or revoke its approval of the contract.
The California's applicable statute (2) sets forth procedures concerning judicial approval of minors' contract for artistic or creative services. The details of what is required by the court, similar to the information required under New York law, is set forth in detail therein. It is worthwhile to note that, under California law there is no limitation on the length of the term of a minor's contract and there is no requirement that a limited guardian be appointed. Although, as in New York, a hearing is usually required under California law, the only parties required for the proceeding in California are the employer and the employee. Moreover, under California law a maximum of only 50% of net earnings will be set aside until the infant becomes 18 years old, whereas New York has no limit on what portion the court can direct to be set aside.
California courts would have jurisdiction over the action if the minor either resides or is employed in California, or if any party to the contract has its principal office in that state. Accordingly, if jurisdiction is available, a practitioner would be well advised to weigh the relevant pros and cons of having the proceeding commenced in California as opposed to New York.
Although Tennessee does not have a specific statute setting forth a procedure for court approval of contracts relating specifically to the services of minors, Nashville practitioners should be aware of several statutes which may be applicable to such contracts.
One of Tennessee's statutes (3), deals with Guardianships and Conservatorship. As a preliminary matter, application should be made for appointment of a fiduciary or "Guardian Ad Litem" for those deemed incompetent by their infancy.
One section of the Tennessee Code (4) provides for application to the chancery court, for and on behalf of infants, for judicial consent to any "sale of property". Another section of the Code (5) provides that no property of a minor may be sold without prior court approval. These provisions would presumably be applicable to recording agreements and publishing agreements which provide for the transfer of intellectual property rights.
With respect to appointment of a guardian, the Tennessee Code (6) sets a legal threshold for the disposition of funds of a minor which do not exceed $10,000; the court may order that such funds be delivered to the minor, the minors natural guardian(s) or the person with whom the minor resides without appointment of a fiduciary to the minor. By implication, transfers of funds in excess of $10,000 would require court appointment of such a fiduciary. It should be assumed that these provisions would be applicable to management contracts, recording agreements and any other arrangement where the income or advance is estimated to exceed $10,000.
It appears that, for Nashville practitioners, as a practical matter, the more court involvement, on whatever level, the less chance of disaffirmance by the minor.
Beyond procedural issues, it is useful to note that in all three states there is some case law which provides that, although disaffirmance by a minor is a shield, it cannot be used as a sword. The minor cannot disaffirm the contract and at the same time reap the benefits gained thereunder. (7) The party who contracted with the minor would be entitled to just compensation for the performance which had been rendered pursuant to that contract (e.g., management commissions on records sold) prior to disaffirmance.
(c) Wallace Collins, Esq.1. New York Arts and Cultural Affairs Law §35.03, et seq.
2. California Civil Code §36(a)2, et seq.
3. Tennessee Code Annotated, Title 34
4. T.C.A. §34-3-206
5. T.C.A. §34-11-116
6. T.C.A. §34-11-104
7. See,e.g., Eden Mgt. v. Kavovit, 149 Misc 2d 262 (N.Y. 1990)
Wallace Collins is an entertainment lawyer . He was a recording artist for Epic Records before attending Fordham Law School.
Specializing in Entertainment Law & Intellectual Property Matters
Wallace E. J. Collins III, Esq.
250 East 39th St. (Suite 9K)
New York, New York 10016
Tel: 212 661-3656
Email: Wallace Collins
© 1993 - 2010 WALLACE E.J. COLLINS III, ESQ. all Rights Reserved.
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