A California appeals court has overturned a $1.6 million judgment against Rod Stewart's attorneys and agents, but affirmed a judgment for $780,000 in deposits received for a 2002 tour that never occurred.

The decision follows an appeal from a November 2004 jury verdict in the Los Angeles Superior Court in favor of concert promoter Howard Pollack dba PM Group and two subpromoters. At the time, the jury found Stewart's manager, Annie Challis with Stiefel Entertainment, and Stewart's agent, Steve Levine with International Creative Management (ICM), liable for not returning a $780,000 deposit and for negligent misrepresentation.

The jury also found that Pollack and Stewart never entered into a binding contract. Still, they found Levine and Stewart's attorney, Barry Tyerman, then with Armstrong Hirsch Jackoway Tyerman & Wertheimer, liable for $1.6 million for intentionally interfering with subcontracts for Stewart's performances.

In 2001, Pollack began negotiating with Stewart's agent, Levine, for a tour of Latin America. Pollack had subpromoters in each of the cities for the proposed tour. One of them arranged for $100,000 to be deposited into ICM's trust account to demonstrate good faith. Then Pollack agreed with Levine and Stewart's manager, Challis, on a multi-city tour for $2.1 million, half of which was due on signing a formal contract.

Meanwhile, the promoters entered several subcontracts with subpromoters for Stewart's performances.

While various drafts of the main contract were being exchanged between Pollack and Stewart's attorney, Barry Tyerman, the subpromoters made additional deposits. Eventually, negotiations broke down and Stewart didn't perform.

Pollack and two subpromoters sued for return of the $780,000 deposit. They also claimed intentional interference with the subpromoters' contracts.

The California Court of Appeal in Los Angeles last week reversed the $1.6 million judgment for interference with the subpromoters' contracts on two grounds. First, the tort of interfering with a contract can only be committed by a "stranger," one who has no legitimate interest in the performance of the contract, the court wrote. Neither Stewart nor his legal agents (i.e., manager, agent or attorney) could be liable since the subcontracts were for Stewart's performance.

Second, none of the defendants could be liable for not performing a subcontract since those subcontracts were based on rights under a contract that the jury found never existed, i.e., one between Stewart and PM Group, the court wrote.

The appeals court affirmed the $780,000 judgment for return of the deposit and $472,216 in attorney's fees to be paid to the promoters' lawyers.