Calif. Appeal Court, 2nd App. District, Div. 7, January 27, 2016

Appellate court finds that claim for breach of contract for contractual royalties brought against Disney by heirs of Terry Gilkyson, songwriter for “The Jungle Book” film, are not time-barred, based on application of continuous accrual doctrine.

Terry Gilkyson wrote “The Bare Necessities” and several other songs for “The Jungle Book” movie, first released in 1967. Prior to the film’s release, Gilkyson signed single-song contracts with Walt Disney Productions. The contracts provided that Disney would be the author of the songs and the owner of the copyright and, in turn, Disney would pay Gilkyson royalties for sales of sheet music and licensing or other disposition of the mechanical reproduction rights to those songs. The contracts excluded from the royalty obligation Disney’s use of the songs in “motion pictures, photoplays, books, merchandising, television, radio and endeavors of the same or similar nature.”

Gilkyson’s heirs sued Disney Enterprises Inc. and its music publishing subsidiary Wonderland Music Co. Inc. (collectively, Disney), alleging that Disney had breached its contractual obligation to pay them royalties in connection with the use of Gilkyson’s songs on a DVD version of “The Jungle Book” first released in 2007, as well as a prior VHS release of the film and subsequent DVD and Blu-ray versions.

A California trial court dismissed the suit, ruling that the Gilkyson heirs’ causes of action were barred by the four-year statute of limitations applicable to written contracts. It rejected the Gilkyson heirs’ contention that the continuous accrual doctrine rendered their claims timely.

A three-judge Second Appellate Division panel reversed on the breach of contract claims, holding that, under the continuous accrual doctrine, each breach of a recurring obligation is independently actionable. The panel concluded that Disney’s obligation to pay royalties under the contract was a continuing one. It held that under established Supreme Court case law, “the Gilkyson heirs are entitled by virtue of the continuous accrual doctrine to seek recovery of royalties for use of their father’s songs in home entertainment or audiovisual media for a period commencing four years before the filing of their complaint.”

Further, the panel held that the continuous accrual analysis applied to Gilkyson heirs’ claims for declaratory relief. The panel then remanded to the trial court to overrule the demurrer as to breach of contract and declaratory relief causes of action.

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