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Keywords

contractbreach of contractlitigationmotionwillcompliance
contractbreach of contractcompliance

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Audiovisual Publishers, Inc. v. Cenco Inc., 964 F.Supp. 861

Facts

Audiovisual Publishers initiated a breach of contract action against Cenco in 1972, claiming unpaid royalties for cassettes under their 1975 Consent Judgment. The judgment required Cenco to pay royalties on tapes made from AVP's scripted master tapes and allowed AVP to audit Cenco's records. After a lengthy litigation history, an audit by William Shulman concluded that Cenco owed AVP significant royalties, leading to Cenco's motion to vacate the audit findings.

Audiovisual Publishers initiated a breach of contract action against Cenco in 1972, claiming unpaid royalties for cassettes under their 1975 Consent Judgment.

Issue

The main legal issues were whether the auditor's findings should be vacated based on claims of flawed methodology and whether the auditor was required to comply with Generally Accepted Auditing Standards.

The main legal issues were whether the auditor's findings should be vacated based on claims of flawed methodology and whether the auditor was required to comply with Generally Accepted Auditing Standards.

Rule

The court ruled that the auditor was not required to comply with Generally Accepted Auditing Standards (GAAS) and that the prior determinations regarding royalty calculations were the law of the case.

The court ruled that the auditor was not required to comply with Generally Accepted Auditing Standards (GAAS) and that the prior determinations regarding royalty calculations were the law of the case.

Analysis

The court found that the auditor's methodology was appropriate given the lack of relevant records and that the audit was reasonably thorough. It rejected Cenco's arguments regarding the need for GAAS compliance, stating that the Consent Judgment did not explicitly require it. The court also noted that the auditor's conclusions were supported by the evidence presented, despite Cenco's numerous challenges.

The court found that the auditor's methodology was appropriate given the lack of relevant records and that the audit was reasonably thorough. It rejected Cenco's arguments regarding the need for GAAS compliance, stating that the Consent Judgment did not explicitly require it.

Conclusion

The court denied Cenco's motion to vacate the audit findings and upheld the auditor's conclusion that Cenco owed AVP approximately $6.7 million in royalties and interest, with prejudgment interest commencing from the date of the consent judgment.

Judgment accordingly.

Who won?

Audiovisual Publishers prevailed in the case because the court upheld the auditor's findings and rejected Cenco's claims of audit flaws, confirming the amount owed.

Audiovisual Publishers prevailed in the case because the court upheld the auditor's findings and rejected Cenco's claims of audit flaws.

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