Opinion
603786/04.
Decided September 24, 2008.
Gabin B. Rubin, Esq., NY, NY, Counsel for plaintiff.
Cinque Cinque, PC, New York, NY, Counsel for defendants.
In this action for artist's royalties stemming from the alleged breach of a recording agreement, defendants, Unidisc Music, Inc. and Zella Music Publishing, move to dismiss the six causes of action in the complaint pursuant to both CPLR 3211(a)(1) and 3211 (a)(5) based upon the statute of limitations embodied in CPLR 213(a). Plaintiff opposes the motion, asserting that defendants have not met their burden of proof for dismissing the causes of action.
To the extent relevant, on May 14, 1982, plaintiff, Manuel J. Parrish (Parrish), who characterizes himself in the complaint as "one of the most important and influential figures in American electronic dance music", and defendants' predecessor, Importe/12 Records Division Sugarscoop, Inc. (Importe), entered into a recording agreement (Recording Agreement, annexed to Defendants' Notice of Motion as Ex B). Pursuant to the terms of the Recording Agreement, plaintiff agreed to create no fewer than two and no more than twenty (20) master recordings which would be manufactured as phonograph records. In exchange for the recordings, plaintiff was to receive artist royalties equal to six (6) points based on the retail selling price on one hundred (100%) of net actual retail sales of each phonograph record sold in the United States and fifty percent (50%) of net actual income received by Importe from phonograph records sold outside the United States (Artist Royalties). Defendants were required to account and pay plaintiff his royalties twice per year.
Plaintiff commenced this action for past owed royalties and payments apparently sometime in 2004. In a complaint dated three years later, on December 10, 2007, plaintiff sought damages for breach of contract (first cause of action), damages stemming from unjust enrichment (second and third causes of action), seeking an accounting from both Unidisc, pursuant to the Recording Agreement (fourth cause of action), and Zella Music Publishing (fifth cause of action) or alternatively, rescission of the Recording Agreement (sixth cause of action) and for a declaratory judgment that the signature on the Termination Agreement is a forgery and that plaintiff was defrauded (also sixth cause of action).
In support of the motion to dismiss the entire action, defendants submit a termination agreement dated October 3, 1983 that defendants argue the parties entered into (Termination Agreement), whereby it was agreed that in consideration of $25,000, the receipt of which was acknowledged:
" Parrish shall not be entitled to any further payments or royalties pursuant to the Contract, and the Contract is hereby terminated except that:
(a) Importe shall retain as its sole property any and all master recordings made pursuant to the Contract, and copyrights thereof. Importe shall retain the right to authorize, and shall have the exclusive worldwide right to manufacture, sell, license, transfer and deal in phonograph records made from the masters . . . Parrish agrees that he shall receive no further payment in connection therewith.
(b) Parrish shall receive no further royalty statements in connection with the Contract. . . .
(Termination Agreement, annexed to Defendant's Motion for Dismissal as Ex C, emphasis added).
In addition, it was agreed that Importe would retain as its sole property any and all Master Recordings made pursuant to the Recording Agreement and that it would be granted the right to assign the copyrights or masters created by Parrish to any third party ( see id.). Also, the Termination Agreement provided that Parrish acknowledged and fully accepted as accurate the semi-annual royalty statements dated February 28, 1983 and August 31, 1983.
Defendants argue they did not hear from plaintiff for 15 years after the execution of the Termination Agreement until May 1998, when plaintiff's attorney Michael Pantaleoni made inquiry of Unidisc concerning plaintiff's entitlement to royalties. In response, on behalf of defendants, their attorney, Joan Wiesen Lieberman, wrote a May 19, 1998 letter, sent by certified mail and received by Mr. Pantaleoni on May 22, 1998, as reflected in the post office receipt (Defendant's Ex. D, annexed to the Lieberman Affirmation). In her May 1998 letter, Ms. Lieberman specifically stated:
After speaking with representatives of our client, it became clear that the only payments that are due to your client, Manuel J. Parrish, in connection with the exploitation of any of the Masters and/or the Compositions are from his public performance society, ASCAP. Under a fully executed agreement between Mr. Parrish and Importe/12 Records Division, Sugarscoop, Inc. dated October 3, 1983, Mr. Parrish sold and assigned to Sugarscoop, absolutely and without recourse, all of Mr. Parrish's right, title and interest of any nature whatsoever in and to the Masters and the Compositions, but excluding his right to receive his "writer's share" of public performance income, in consideration for a total buy-out sum. Accordingly, Sugarscoop (and therefore, its successor in interest, our client) had no further obligation to pay to Mr. Parrish any sums whatsoever in connection wit the exploitation of the Masters and/or the Compositions after the date of this buy-out agreement.
(emphasis added) (Lieberman Letter annexed to affidavit of Joan Wiesen Lieberman as Ex D).
A motion to dismiss based upon the documentary evidence, pursuant to CPLR 3211 (a)(1), should only be granted where the documentary evidence submitted "conclusively establishes a defense to the asserted claims as a matter of law [citation omitted]" ( 511 W. 232nd Owners Corp. v Jennifer Realty Co.[citation omitted], 98 NY2d 144). The defendant seeking dismissal must demonstrate that the documentary evidence "resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim [citation omitted]" ( Berger v Temple Beth-El of Great Neck, 303 AD2d 346, 347 [2nd Dept 2003]).
Declaratory Judgment Regarding Forged Termination Agreement
Plaintiff seeks a declaration that defendants forged his signature on the Termination Agreement. Thus, the gravamen of the cause of action is to set aside the Termination Agreement as "fraudulent" based upon the claim of forgery. Concepts of "forgery and "fraud" are so closely related that the Statute of Limitations applicable to fraud cases (CPLR 213) is also applicable in forgery cases ( Piedra v Vanover, 174 AD2d 191 [2nd Dept 1992]). This is because "forgery" is considered a species of "fraud" ( id.).
Defendants' have met their burden in establishing that the this claim is time-barred. Under CPLR 213 (8), a cause of action based upon actual fraud must generally be commenced within six years of the commission of the fraud or pursuant to CPLR 203, commenced within two years after actual discovery or the date fraud should have been discovered with the exercise of reasonable diligence ( Animal Protective Found of Schenectady v Bast Hatfield, Inc., 306 AD2d 683, 684). Defendants have established that the alleged fraud/forgery complained of in this action occurred on the date the Termination Agreement was executed in October 1983, for which the six year statute of limitations would have expired in October 1989. Defendants also established that even if the discovery rule is applied, the clock would have started ticking in 1998, and expired in May 2000, two years from the date that plaintiff admittedly was put on notice that defendants claimed a right to his work.
In response, plaintiff relies on the tolling provision of CPLR 203 (g), which allows actions for fraud to be commenced within two years of the time when the operative facts could have been discovered or reasonably should have been discovered ( Fitzgerald v Fitzgerald, 301 AD2d 851 [3rd Dept 2003]). While plaintiff admits that in May 1998 he was actually notified by his attorney that defendants claimed a right to his recordings, he claims that he was never provided with the actual Termination Agreement that he is alleged to have signed. In addition, plaintiff maintains that he has no recollection of any of the documents that he may have signed with defendants (Parrish Affidavit, par 12).
The plaintiff, who seeks the benefit of the discovery exception to the six-year statute of limitations, has failed justify his assertion that the fraud could not have reasonably been discovered within two years of 1998 ( see Siler v Lutheran Social Servs. of Metro NY , 10 AD3d 646 [2nd Dept 2004]). The fact that the plaintiff admittedly chose not to question his attorney about the details of the defendant's claim of right and concededly chose not to read the agreements he signed with defendants is insufficient since "a signer of an agreement is deemed to be conclusively bound by its terms whether or not he or she read it" ( Maines Paper Food Serv. v Adel, 256 AD2d 760, 761). Plaintiff has offered no reasonable explanation or justification as to why he waited 22 years to seek his claimed royalties and at least six from the date he discovered the asserted fraud to bring a claim. Thus, plaintiff's claim for fraud/forgery regarding the Termination Agreement in May 1998, which he was admittedly on notice of, asserted for the first time in 2004, is clearly time-barred.
Furthermore, the essential elements of a claim for fraud are a misrepresentation or concealment of a material fact, falsity, scienter, and reliance ( see e.g. Kaufman v Cohen, 307 AD2d 113, 119 [1st Dept 2003]). To survive a motion to dismiss, the complaint must make factual allegations sufficient to support each element of a cause of action for fraud (see e.g. Prichard v 164 Ludlow Corp., 14 Misc 3d 1202[A], [ 2006 NY Slip Op 52381, Sup Ct NY County], affd 49 AD3d 408 [1st Dept 2008]]). Plaintiff has failed to allege how the termination agreement could still be considered affirmatively concealed after he was admittedly put on notice of defendants alleged rights to his music in 1998, more than two years before the matter was commenced. Moreover, a party cannot claim reliance on a misrepresentation when he or she could have discovered the truth with due diligence ( see KNK Enterprises Inc. v Harriman Enterprises, Inc. , 33 AD3d 872 [2nd Dept 2006]); East 15360 Corp v Provident Loan Socy. of NY, 177 AD2d 280 [1st Dept 1991]). Here, admittedly, plaintiff asked his counsel to contact defendants and inquire as to his entitlements under the Recording Agreement in 1998 and did not proceed with any legal action, despite knowing that he had never received his royalties and that defendants refused to give any to him because they claimed a right to his work pursuant to a fully executed agreement. [ See Exh. D, Notice of Motion]. Thus, plaintiff's reliance cannot be considered reasonable or justifiable.
Breach of Contract
Defendant met their burden in conclusively establishing that any claims for breach of the Recording Agreement are barred by the clear terms of the Termination Agreement pursuant to CPLR 3211(a)(1) ( cf 511 w 232nd Owners Corp v Jennifer Realty Co., 98 NY2d 144). The terms of the Termination Agreement clearly establish that any claims for royalties ended in 1983, when the Termination Agreement was executed. Plaintiff's assertions concerning his not having knowledge of this Termination Agreement are "flatly contradicted" by the documentary evidence ( see Wilson v Hochberg, 245 AD2d 116 [1st Dept 1997]).
In addition, defendants have established that the claim is also time-barred pursuant to the six-year Statute of Limitations governing contracts.
Plaintiff's Claims for Unjust Enrichment
Plaintiff's claims for unjust enrichment fail by reason of the Termination Agreement as well as the six year statute of limitations provided under CPLR 213 ( Frank Mgt Inc. v Weber, 145 Misc 2d 995).
Plaintiff's Claims for an Accounting
Defendants have met their burden in establishing that the clause in the Termination Agreement acknowledging receipt of two accounting statements conclusively establishes a defense to the causes of action seeking an accounting for royalties owed. Plaintiff has failed to oppose this.
In sum, defendants met their burden in establishing that causes of action alleged in the complaint are barred by the Termination Agreement and the statute of limitations.
Accordingly, it is
ORDERED that the motion to dismiss is granted in its entirety and the complaint is dismissed with costs and disbursements to defendants as taxed by the Clerk of the Court; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.