Opinion
No. 654129/2013.
08-15-2014
Robyn ASIMOV and Janet Asimov, as Co–Executors of The Estate of Isaac Asimov, Plaintiffs, v. TRIDENT MEDIA GROUP, LLC and Robert Gottlieb, Defendants.
Jaspan Schlesinger LLP, for plaintiffs. Frankfurt Kurnit Klein & Selz, P.C., for defendants.
Jaspan Schlesinger LLP, for plaintiffs.
Frankfurt Kurnit Klein & Selz, P.C., for defendants.
Opinion
SHIRLEY WERNER KORNREICH, J.
Defendants Trident Media Group, LLC (TMG) and Robert Gottlieb move, pursuant to CPLR 3211, to dismiss the Complaint. Plaintiffs Robyn Asimov and Janet Asimov, as co-Executors of the Estate of Isaac Asimov (the Estate), oppose the motion and also cross-move, pursuant to CPLR 1018 & 1021, to substitute Asimov Holdings LLC (Holdings) as plaintiff in their stead. Defendants do not oppose the cross-motion, but maintain that it is moot if their motion to dismiss is granted. For the reasons that follow, defendants' motion to dismiss is granted and plaintiffs' cross-motion is denied as moot.
Procedural History & Factual Background
As this is a motion to dismiss, the facts recited are taken from the Complaint.
Isaac Asimov, a prolific writer of science fiction, died in 1992. Complaint ¶¶ 4–5. His daughter, Robyn, and wife, Janet, are co-Executors of his estate. ¶¶ 8–10. TMG is a literary service agency. ¶ 11. Gottlieb is an employee of TMG. ¶ 12. In a contract dated September 11, 2008 (the Agreement), the Estate agreed to pay TMG to be
[the Estate's] exclusive representative and grant to TMG the sole and exclusive worldwide right to negotiate agreements for (a) the sale, license or other disposition of all literary works [ ] in which [the Estate] hold[s] a copyright interest (collectively, the “Works”), all Versions of the Works, and, if applicable (b) the Services. As used herein “Services” means any services (e.g., screenwriter, producer etc.) which [the Estate] may render incidental to the sale, license or other disposition of the Works and/or Versions of the Works.
¶¶ 1, 13; see Dkt. 7 at 15. The Agreement had a two-year term.
The Agreement provides that it “automatically shall be extended for successive, additional periods of two (2) years each, unless the party wishing to terminate this Agreement gives written notice of termination to the other within [120] days prior to the date on which the Term otherwise would expire.” Complaint ¶¶ 16–17; see Dkt. 7 at 15. The Agreement further provides that TMG shall make reasonable efforts to keep [the Estate] advised as to all negotiations that TMG undertakes on [the Estate's] behalf hereunder. Any and all agreements negotiated by TMG hereunder shall be subject to [the Estate's] approval and shall be entered into by [the Estate] and in [the Estate's] name. [The Estate] shall refer to TMG all inquiries pertaining to the Works, any Versions of the Works and the Services to facilitate the performance of TMG's functions hereunder.Dkt. 7 at 15. The Agreement is governed by New York law. Id. at 18.On November 4, 2013, the Estate sent TMG a cease and desist letter, in which the Estate accused TMG of breach and demanded that it immediately stop acting as the Estate's representative. Complaint ¶ 18. The Estate further contended that the Agreement terminated at the end of its original, two-year term, on September 10, 2010. Id. It is undisputed that, prior to November 4, 2013, the Estate never provided TMG with a written termination notice, nor did TMG inform the Estate that it was relying on the Agreement's automatic renewal provision prior to the two contract renewals. TMG responded in a letter dated November 8, 2013, that the Agreement was not terminated. ¶ 19.
According to TMG, the Agreement is currently set to expire in September 2014.
The Estate commenced this action on November 27, 2013. The Complaint asserts two causes of action: (1) violation of New York General Obligations Law (GOL) § 5–903 ; and (2) deceptive business practices pursuant to New York General Business Law (GBL) § 349. On its first cause of action, the Estate requests a judicial declaration that the contract terminated on September 10, 2010, and an injunction enjoining TMG from representing the Estate, holding themselves out as the Estate's representative or interfering with the Estate's rights to license, sell or otherwise dispose of any of the Estate's literary work. The Estate requests money damages on the second cause of action.
Defendants now move to dismiss. They argue that: (1) GOL § 5–903 does not apply to the Agreement; (2) GBL § 349 does not apply to the parties arms' length transaction and, in any event, cannot be predicated on something expressly permitted by the contract; and (3) the Complaint fails to state a claim against Gottlieb individually. The Estate disputes defendants' first two arguments, but does not oppose dismissal of Gottlieb as a defendant. The claims against Gottlieb, therefore, are dismissed.
Additionally, the Estate cross-moves to substitute Holdings as plaintiff based on a Copyright Assignment, dated January 7, 2014, which assigned the rights under the subject works to Holdings. See Dkt. 13. TMG does not oppose substitution, but contends the proposed substitution is unnecessary because the Complaint fails to state a claim upon which relief can be granted.
Discussion
On a motion to dismiss, the court must accept as true the facts alleged in the complaint as well as all reasonable inferences that may be gleaned from those facts. Amaro v. Gani Realty Corp., 60 AD3d 491 (1st Dept 2009) ; Skillgames, LLC v. Brody, 1 AD3d 247, 250 (1st Dept 2003), citing McGill v. Parker, 179 A.D.2d 98, 105 (1992) ; see also Cron v. Harago Fabrics, 91 N.Y.2d 362, 366 (1998). The court is not permitted to assess the merits of the complaint or any of its factual allegations, but may only determine if, assuming the truth of the facts alleged, the complaint states the elements of a legally cognizable cause of action. Skillgames, id., citing Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275 (1977). Deficiencies in the complaint may be remedied by affidavits submitted by the plaintiff. Amaro, 60 NY3d at 491. “However, factual allegations that do not state a viable cause of action, that consist of bare legal conclusions, or that are inherently incredible or clearly contradicted by documentary evidence are not entitled to such consideration.” Skillgames, 1 AD3d at 250, citing Caniglia v. Chicago Tribune–New York News Syndicate, 204 A.D.2d 233 (1st Dept 1994). Further, where the defendant seeks to dismiss the complaint based upon documentary evidence, the motion will succeed if “the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law.” Goshen v. Mutual Life Ins. Co. of NY, 98 N.Y.2d 314, 326 (2002) (citation omitted); Leon v. Martinez, 84 N.Y.2d 83, 88 (1994).
GOL § 5–903(2)
GOL § 5–903(2) provides:
No provision of a contract for service, maintenance or repair to or for any real or personal property which states that the term of the contract shall be deemed renewed for a specified additional period unless the person receiving the service, maintenance or repair gives notice to the person furnishing such contract service, maintenance or repair of his intention to terminate the contract at the expiration of such term, shall be enforceable against the person receiving the service, maintenance or repair, unless the person furnishing the service, maintenance or repair, at least fifteen days and not more than thirty days previous to the time specified for serving such notice upon him, shall give to the person receiving the service, maintenance or repair written notice, served personally or by certified mail, calling the attention of that person to the existence of such provision in the contract.
See Donald Rubin, Inc. v. Schwartz, 160 A.D.2d 53, 56 (1st Dept 1990) (discussing history of New York's restrictions on automatic renewal clauses).
As the Appellate Division recently explained, while GOL § 5–903(2) “does not define personal property' § 5–903(2) has been analyzed by courts in a variety of circumstances to determine its applicability. Personal property has been interpreted to include intellectual property as well as tangible personal property.” Healthcare I.Q., LLC v. Chao, 118 AD3d 98, 103 (1st Dept 2014) (collecting cases), accord Tel. Secretarial Serv. v. Sherman, 28 A.D.2d 1010, 1011 (2d Dept 1967) (“The words service, maintenance or repair' in [GOL § 5–903(2) ] are to be generously read in order that their scope will engage the variegated evil the statute was intended to meet”). However, where the services rendered are “merely of a consulting, analytical or administrative nature,” GOL § 5–903(2) is inapplicable. Id. at 104, citing Donald Rubin, 160 A.D.2d at 56–57;see also Carbo Indus., Inc. v. Coastal Refining & Marketing, Inc., 154 FedAppx 218, 220 (2d Cir2005) (personal services contracts, such as consulting contracts, are “limited exception” to GOL § 5–903 ).The parties dispute whether TMG's services as the Estate's literary agent fall under the ambit of § 5–903(2) or are covered by the consulting exception. In reviewing the applicable caselaw, this appears to be a question of first impression under New York law. While a federal court in California recently held that § 5–903(2) applies to a similar agreement [see Mann v. MediaNet Digital, Inc., No. 2:13–cv–05269, Dkt. 26 (CD Cal Nov. 27, 2013) ], no controlling New York precedent exists. In light of the novelty of this issue, the court declines to address the applicability of § 5–903(2) because, on the facts presented, the court cannot issue the requested declaratory judgment.
The parties do not dispute that, regardless of whether the Agreement terminated in September 2010, the Estate is obligated to pay for TMG's services rendered though November 4, 2013, which the Estate knew about but did not object to. Dkt. 20 (7/22/14 Tr. at 13) (plaintiff's counsel admitted the obligation to pay “for any deals that [the Estate] entered into that [TMG] represented us on prior to the termination date of [November 4, 2013]”); see Ludl Elecs. Prods., Ltd. v. Wells Fargo Fin. Leasing, Inc., 6 AD3d 397, 398 (2d Dept 2004) (plaintiff having continued beneficial use of equipment not entitled to recover lease payments pursuant to GOL § 5–901 ; moreover, GOL § 5–901 does not entitle plaintiff to knowingly and willingly continue to accept benefit without compensating defendant). Consequently, there is no pending fee dispute between the parties. As further explained below, since the GBL claim is also legally deficient, the parties' dispute over whether the Agreement is currently in place has no further, practical ramifications. Hence, issuing a declaratory judgment on the matter would be improper. The court reaches this conclusion based on Ovitz v. Bloomberg L.P., 77 AD3d 515 (1st Dept (2010), aff'd 18 NY3d 753 (2012). In Ovitz, the plaintiff challenged the automatic renewal provision of his Bloomberg terminal subscription agreement under GOL § 5–903(2) and GBL § 349. See 18 NY3d at 756. The Appellate Division held that § 5–903(2) applied, and thus the automatic renewal provision was unenforceable since Bloomberg failed to provide plaintiff with the requisite notice that it intended to rely on the renewal provision. See 77 AD3d at 515–16. Nonetheless, the Appellate Division dismissed the action, refusing to issue a declaratory judgment because “plaintiff makes no allegations that he paid for services he did not receive.” Id . at 516. The Court of Appeals affirmed, noting that Bloomberg waived its claim for fees, and, therefore, plaintiff incurred no monetary damages. See 18 NY3d at 757. The Court held that “[i]n light of the absence of actual injury there is neither a justiciable controversy upon which declaratory judgment can be rendered, nor irreparable harm necessary for injunctive relief.” Id. at 760. Here, as in Ovitz, there is neither a justiciable controversy nor irreparable harm.
While the parties indicated that an HBO deal that was at the route of this dispute but which never came to pass is a possibility, it is well settled that a “hypothetical possibility that a lawsuit might be filed is not sufficiently immediate and real to constitute a justiciable controversy.” Spitzer v. Schussel, 48 AD3d 233, 234 (1st Dept 2008) ; see Waterways Dev. Corp. v. Lavalle, 28 AD3d 539, 540 (2d Dept 2006) (“A justiciable controversy must involve a present, rather than hypothetical, contingent or remote, prejudice to the plaintiff”).
The dissent in Ovitz took a broader view of the circumstances when a declaratory judgment should be issued. See 18 NY3d at 760–64 (Pigott, J., dissenting) If the dissent's position was the law, this court would have reached the merits of the § 5–903(2) claim. However, the majority's opinion in Ovtiz clearly precludes this court from rendering a declaratory judgment on whether the Agreement terminated in 2010 by virtue of § 5–903(2) where, as here, the parties have no current fee dispute that turns on such a determination. Indeed, this is a good rule since the law differentiates between an automatic renewal period in which plaintiff accepted services without objection and a situation where plaintiff objected to further services while defendant insisted on collecting additional fees under the automatic renewal provision. In the former scenario, quantum meruit compensation is recoverable [see Edward S. Gordon Co., v. Peninsula N.Y. Partnership, 245 A.D.2d 189, 190 (1st Dept 1997), accord Martin H. Bauman Assocs., Inc. v. H & M Int'l Transport, Inc., 171 A.D.2d 479, 484 (1st Dept 1991) ], while the latter situation is precisely the sort of “variegated evil the statute was intended to meet.” See Tel. Secretarial Serv., 28 A.D.2d at 1011, citing Peerless Towel Supply Co. v. Triton Press, Inc., 3 A.D.2d 249, 251 (1st Dept 1957) (“This bill seeks to protect all businessmen from fast talking sales organizations armed with booby traps which they plant in business contracts many unsuspecting small businessmen are taken in by such evil practices”).
GBL § 349
Moreover, the Court of Appeals in Ovitz also held that the GBL § 349 claim should be dismissed because such a claim fails in the absence of any injury to plaintiff. Id. at 759. That is the case here. Additionally, the Estate's GBL § 349 claim is not viable for two other reasons.
“A plaintiff under [GBL § 349 ] must prove three elements: first, that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act.” Stutman v. Chemical Bank, 95 N.Y.2d 24, 29 (2000). As already noted, there is no injury here. Further, the instant Agreement is not “consumer-oriented.” See Medical Soc. of State of N.Y. v. Oxford Health Plans, Inc., 15 AD3d 206, 207 (1st Dept 2005) (“Consumers' are those who purchase goods and services for personal, family or household use” '); Continental Cas. Co. v. Nationwide Indem. Co., 16 AD3d 353, 354 (1st Dept 2005) (“These allegations, liberally construed, at best show a private contract dispute over policy coverage and the processing of defendants' claims, not conduct affecting the consuming public at large, and thus do not state a cause of action under § 349 ”), accord NY Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 320–21 (1995). Finally, a GBL § 349 claim does not lie when the alleged deceptive practice, as here, was a matter explicitly disclosed in and permitted under the parties' written agreement. Broder v. MBNA Corp., 281 A.D.2d 369, 371 (1st Dept 2001), citing Sands v. Ticketmaster–New York, Inc., 207 A.D.2d 687 (1st Dept 1994) ; see also Zuckerman v. BMG Direct Mktg., Inc., 290 A.D.2d 330, 331 (1st Dept 2002).In sum, the declaratory judgment claim fails because it does not impact on any actual financial controversy between the parties. The GBL claim fails because the statute does not apply to the Agreement. Accordingly, it is ORDERED that the motion to dismiss by defendants Trident Media Group, LLC and Robert Gottlieb is granted and plaintiff's cross-motion is denied, and the Clerk is directed to enter judgment dismissing the Complaint.
The dismissal of this action shall not prejudice either party's rights to sue for any actual unpaid amounts due under the Agreement. That being said, assuming the parties' representations at oral argument were accurate, no such suit appears to be forthcoming.