Opinion
10 Civ. 2625 (PGG).
March 31, 2011
MEMORANDUM OPINION ORDER
This action relates to a benefit concert performed by Aretha Franklin in April 2001 (the "Concert"), and certain oral and written agreements the parties allegedly entered into concerning the commercial exploitation of recordings of that concert. In the Second Amended Complaint ("SAC"), Plaintiff BLD Productions alleges that Defendants Viacom, Inc. and its affiliate, Remote Productions, Inc. ("RPI") (SAC, ¶ 8), breached contract and quasi contract obligations to: (1) "engage a distributor to manufacture, distribute and market the audio and video recordings of the Concert" (id. ¶¶ 64-65, 68-71, 78-79, 86, 90-91); (2) "account for all sales and revenues and pay royalties to BLD" (id. ¶ 69); and (3) "provide plaintiff with the master recordings [of the Concert] for review and editing." (Id. ¶ 73-74) The SAC pleads claims for breach of oral contract, breach of written contract, breach of the implied obligation of good faith and fair dealing, and promissory estoppel. Pending before the Court is Defendants' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons stated below, Defendants' motion will be granted in part and denied in part.
BACKGROUND
On April 10, 2001, Aretha Franklin performed a concert at Radio City Music Hall entitled "VH-1 Divas Live: The One and Only Aretha Franklin — A Benefit Concert for the VH-1 Save the Music Foundation." (SAC, ¶¶ 1, 19) Ms. Franklin granted certain rights to BLD concerning the Concert, including her rights regarding video and audio recordings of the Concert. (SAC, ¶ 4; Ex. A (Agreement), ¶¶ 1(d)(ii), 7(b)(i))I. THE MARCH 8, 2001 AGREEMENT
The SAC alleges that BLD and Defendants began negotiating an agreement concerning the Concert, Ms. Franklin's participation in it, and the distribution of CD and DVD recordings of the Concert as early as 1999. (SAC, ¶ 24) The "parties written agreement" concerning these matters is attached to the SAC as Exhibit A (the "Agreement") and is "Dated as of March 8, 2001." (Id.; Ex. A (Agreement)) Plaintiff BLD and Defendant RPI are the only signatories to the Agreement.
No other date appears on the Agreement. (SAC, Ex. A (Agreement))
In the Agreement, BLD agrees to make Ms. Franklin available for the Concert, and to "deliver all rights owned and/or controlled by the Artist necessary for RPI to perform its obligations and exercise its rights. . . ." (SAC, Ex. A (Agreement), ¶ 20(b)(ii)) RPI agrees to pay BLD $150,000, and the parties agree to share revenue generated by ticket sales. (Id. ¶¶ (1)(d)(ii), 13)
RPI has a number of obligations under the Agreement, including engaging guest artists and production personnel, and securing production equipment and a venue for the Concert. (Id. ¶ 1) As to rights, the Agreement states that "RPI shall be the owner of all right, title and interest in and to the Concert and the Program [embodying the Concert] (and all rights therein) subject to the terms of this Agreement. . . ." (Id. ¶ 3(a)) RPI is granted the "exclusive right to exhibit, license and distribute the Program in all television media worldwide (without regard to the manner of delivery) and in perpetuity." (Id. ¶ 8(a)) The Agreement also grants RPI "the right to license and distribute the Program to third parties worldwide ("International Syndication")." (Id. ¶ 5(a)(i))
The Agreement also grants RPI "the exclusive right and authority to solicit, negotiate, and execute [sic] a distributor (the "Distributor") to manufacture, distribute, advertise and promote . . . Phonorecords [of the Concert] in any audio or audio-visual format or configuration." (Id. ¶ 6)
As to master recordings, the Agreement provides:
The master recordings featuring the performances from the Concert and/or Program (the "Masters") shall be licensed to the Distributor pursuant to an agreement between RPI, on the one hand, and the Distributor, on the other (the "Distribution Agreement"), providing for the release of one (1) album (the "Album") in any audio-only configuration(s) embodying Masters, single records ("Singles") embodying one (1) or more of the Masters, and one (1) home video product in any audio-visual configuration(s) intended solely for home consumer use (including without limitation, videocassettes and videodiscs) which permitted configurations shall not include any interactive products (including without limitation, CD-ROM or DVD-ROM products) (the "Home Video"). The terms of the Distribution Agreement shall be subject to mutual approval of the parties hereto provided that in the event of any dispute, RPI shall have final approval of such terms. . . .
(Id. ¶ 6(a))
As to royalties — no distributor yet having been engaged — the Agreement sets forth the parties' intention "to secure for themselves royalty rates and advances at fair market value." (Id. ¶ 6(b))
The Agreement obligates RPI to pay BLD "40% of the 'Net Proceeds' of Ancillary Revenues derived from Ancillary Uses." (Id. ¶ 8(a)) "Ancillary Revenues" is defined as "any non-refundable revenues actually received from . . . Ancillary Uses." (Id. at Preamble) "Ancillary Uses" is defined as "exhibition, licensing and distribution of the Program, and the manufacture, distribution and exploitation of Phonorecords and other Merchandise [derived from the Concert and/or Program]." (Id.)
"Net Proceeds" is defined as "all non-refundable Ancillary Revenues less (1) RPI's distribution fee; (2) RPI's distribution expenses; (3) any Artist costs in connection with the Concert, such as travel and hotel; and (4) "on a pari pasu basis, the respective amounts paid by RPI and [BLD] to satisfy the Artist Fee. . . ." (Id.)
As to accounting obligations, the Agreement provides as follows:
Each party shall pay the other their respective portion of Net Proceeds, together with a detailed accounting statement on a calendar semi-annual basis, not later than ninety (90) days after the expiration of each such calendar semi-annual period. Each party shall keep and maintain true and accurate books of account and records with respect to the subject matter of this Agreement, which books and records, together with supporting documentation, each party (or their respective representative) shall have the right to audit at such party's sole cost and expense, during regular business hours and upon reasonable advance notice, provided that each party shall notify the other of any specific objection to any accounting statement within one (1) year after such party's receipt thereof and a failure to make a specific objection within said time period shall be deemed to constitute approval of the statement concerned.
(Id. ¶ 8(c))
Finally, the Agreement contains the following integration clause:
This Agreement, and the exhibits attached hereto, contain the entire understanding and supersedes all prior understandings and agreements, whether oral or written, between the parties hereto relating to the subject matter herein, and this Agreement cannot be changed or terminated except in a written instrument signed by both parties hereto.
(Id. ¶ 23(a))
II. THE CONCERT AND ITS AFTERMATH
Although the Agreement is dated March 8, 2001, and the Concert went forward as scheduled on April 10, 2001, the SAC contends that the Agreement "was the culmination of years of negotiations" and was not finalized until "in or about 2006" (SAC, ¶¶ 19, 24):
BLD sent defendants a signed Agreement and urged them to countersign the document without delay so that the parties could take advantage of potential distribution opportunities, but defendants did not respond promptly and, in fact, ignored BLD's repeated contacts and multiple inquires about the status of the Agreement. Defendants finally sent BLD the countersigned Agreement in or about 2006.
(Id. ¶ 38)
With respect to RPl's alleged breaches of the Agreement — its failure to engage a distributor, provide the master tapes, or provide an accounting (id. ¶¶ 64-65, 68-71, 73-74, 78-79, 86, 90-91) — the SAC pleads the following facts:
As to the distributor, the SAC asserts that in the months after the concert BLD "repeatedly contacted defendants and made it clear that, even though the written Agreement had not yet been signed, defendants needed promptly to select a distributor." (Id. ¶ 37) In support of this assertion, BLD attaches as an exhibit to the SAC a November 30, 2001 letter from Lee Tofanelli, a managing director at BLD, to Janet Rolle, a vice president at VH-1. While the letter does not indicate that the Agreement is not yet signed, and does not demand that Defendants "promptly . . . select a distributor," it does indicate that both BLD and VH-1 representatives have been seeking a distributor:
The Agreement provides that the Concert will first be shown on VH-1. (SAC, Ex. A (Agreement) ¶ 5(a)). The SAC alleges that VH-1 is a "property" of Viacom and that VH-1 executives discussed with BLD orally and in writing album and home video distribution of the Concert "well before the written Agreement was finalized." (SAC, ¶¶ 8, 31-33)
Ms. Franklin and I were notified that Artista has agreed to release the DVD rights to Ms. Franklin's Diva show so that we may conclude a distribution deal with another company.
I know that you have been negotiating with Image Entertainment, as I have with Medacy Entertainment. I suggest that we speak at your earliest convenience to compare these offers. Also, please note that there are editing and audio changes that need to be made to the program before it is released to any DVD distributor. Those are changes that were requested by Ms. Franklin that we did not do during the post-concert editing sessions.
I will coordinate my schedule with that of Ms. Franklin and the selected distributor so as to accommodate making these corrections as expeditiously as possible. I will also coordinate Ms. Franklin's schedule so as to approve the cover art and liner notes within the requested timeframe.
I look forward to speaking with you at your earliest convenience.
(Id., Ex. C (Nov. 30, 2001 Ltr.))
The SAC contends that "defendants not only failed to identify and engage a distributor on their own, but also ignored BLD's suggestions regarding distributors that were interested in the Concert recordings." BLD further alleges that "Defendants have failed and refused to make any reasonable efforts to solicit, negotiate with, or finalize terms with any distributor despite having had more than ample time to do so." (SAC, ¶¶ 40, 43)
With respect to the master tapes, the SAC pleads that "BLD has asked defendants numerous times for the master tapes, but its requests have been ignored." (Id. ¶ 52)
With respect to Defendant's accounting obligations under the Agreement, the SAC pleads:
Defendants have made very limited sales of international versions of the as-aired Concert. . . .
The Agreement obligates defendants to pay BLD forty percent of the net proceeds of royalties from recording sales and forty percent of other "Ancillary Revenues derived from Ancillary Uses," a term defined in the Agreement to include revenue from international sales and royalties from international rebroadcasts, which include the as-aired Concert.
BLD has asked the defendants to account for international sales of the as-aired Concert. In response, defendants admitted to limited distribution of the as-aired tape, but refused to provide any sales revenue information.
Defendants have not paid BLD any fees, royalties or other monies in connection with the as-aired tape or the distribution of any audio or video recordings of the Concert.
(Id. ¶¶ 46-49)
BLD filed this action on March 23, 2010 (see Dkt. No. 1), bringing claims for breach of oral contract (SAC, ¶¶ 62-66), breach of written contract (id. ¶¶ 67-71), breach of the implied obligation of good faith and fair dealing (id. ¶¶ 72-79), and promissory estoppel. (Id. ¶¶ 80-89) Defendants have moved to dismiss BLD's claims, contending that BLD has pled no facts as to Viacom, and that as to RPI, BLD's claims are time-barred or otherwise fail to state a claim.
DISCUSSION
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "In considering a motion to dismiss . . . the court is to accept as true all facts alleged in the complaint," Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 237 (2d Cir. 2007) (citing Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 87 (2d Cir. 2002)), and must "draw all reasonable inferences in favor of the plaintiff." Id. (citing Fernandez v. Chertoff, 471 F.3d 45, 51 (2d Cir. 2006)).
A complaint is inadequately pled "if it tenders 'naked assertion[s]' devoid of 'further factual enhancement,'" Iqbal, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 557), and does not provide factual allegations sufficient "to give the defendant fair notice of what the claim is and the grounds upon which it rests." Port Dock Stone Corp. v. Oldcastle Ne., Inc., 507 F.3d 117, 121 (2d Cir. 2007) (citing Twombly, 550 U.S. at 555).
"Under New York law, the initial interpretation of a contract 'is a matter of law for the court to decide.'" K. Bell Assocs. v. Lloyd's Underwriters, 97 F.3d 632, 637 (2d Cir. 1996) (quotingReadco, Inc. v. Marine Midland Bank, 81 F.3d 295, 299 (2d Cir. 1996)). "'[A] written contract is to be interpreted so as to give effect to the intention of the parties as expressed in the unequivocal language they have employed.'" Rockland Exposition, Inc. v. Alliance of Auto. Serv. Providers of N.J., 08-CV-7069 (KMK), 08-CV-11107 (KMK), 2009 WL 1154094, at *5 (S.D.N.Y. Mar. 19, 2009) (quoting Terwilliger v. Terwilliger, 206 F.3d 240, 245 (2d Cir. 2000)). Accordingly, where a "'contract is clear and unambiguous on its face, the intent of the parties must be gleaned from within the four corners of the instrument, and not from extrinsic evidence.'" RJE Corp. v. Northville Indus. Corp., 329 F.3d 310, 314 (2d Cir. 2003) (quoting De Luca v. De Luca, 300 A.D.2d 342 (2d Dept. 2002)); see also Terwilliger, 206 F.3d at 245 ("Construing an unambiguous contract provision is a function of the court, rather than a jury, and matters extrinsic to the agreement may not be considered when the intent of the parties can fairly be gleaned from the face of the instrument." (citingTeitelbaum Holdings, Ltd. v. Gold, 48 N.Y.2d 51, 56 (1979))). "An ambiguity exists where the terms of the contract 'could suggest more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.'" RSL Commc'ns, PLC v. Bildirici, No. 04 Civ. 5217 (RJS), 2010 WL 846551, at *1 (S.D.N.Y. Mar. 5, 2010) (quoting Law Debenture Trust Co. of N.Y. v. Maverick Tube Corp., 595 F.3d 458, 466 (2d Cir. 2010)).
The Agreement provides that it is governed by New York law and "that the federal courts of the Southern District of New York and the New York state courts shall have sole and exclusive jurisdiction over any suit or other proceeding arising out of this Agreement." (SAC, Ex. A (Agreement), ¶ 23(c))
"Where there are alternative, reasonable constructions of a contract, i.e., the contract is ambiguous, the issue 'should be submitted to the trier of fact.'" K. Bell Assocs., 97 F.3d at 637 (quoting Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568, 573 (2d Cir. 1993)). However, "[l]anguage whose meaning is otherwise plain does not become ambiguous merely because the parties urge different interpretations in the litigation." Hunt Ltd. v. Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1277 (2d Cir. 1989). "Thus, the court should not find the contract ambiguous where the interpretation urged by one party would 'strain [] the contract language beyond its reasonable and ordinary meaning.'" Maverick Tube Corp., 595 F.3d at 467 (quotingBethlehem Steel Co. v. Turner Constr. Co., 2 N.Y.2d 456, 459 (1957)).
I. BLD'S CLAIMS AGAINST VIACOM WILL BE DISMISSED
Viacom is not a party to the Agreement (see SAC, Ex. A (Agreement)), nor has BLD pled facts demonstrating that Viacom entered into an oral agreement with BLD or engaged in conduct with BLD that would provide a cause of action for promissory estoppel. Instead, BLD's claims against Viacom are based on the allegation that RPI is "owned by Viacom." (SAC, ¶ 12). Viacom's status as RPI's corporate parent does not provide a basis for liability, however.
"Generally, the law view corporations as entities 'endowed with a separate and distinct existence from that of its owners. Because a principal purpose for organizing a corporation is to permit its owners to limit their liability, there is a presumption of separateness between a corporation and its owners, . . . which is entitled to substantial weight.'" Beck v. Consol. Rail Corp., 394 F. Supp. 2d 632, 637 (S.D.N.Y. 2005) (quoting Am. Protein Corp. v. AB Volvo, 844 F.2d 56, 60 (2d Cir. 1988)).
Accordingly, "[u]nder New York law a corporate parent is not automatically liable for the acts of its wholly owned subsidiary. . . ." Mouawad Nat'l Co. v. Lazare Kaplan Int'l Inc., 476 F. Supp. 2d 414, 421 (S.D.N.Y. 2007) (footnote omitted) (citing Beck, 394 F. Supp. 2d at 637; Manchester Equip. Co. v. American Way, Moving Co., 60 F. Supp. 2d 3, 7 (E.D.N.Y. 1999);Am. Protein Corp., 844 F.2d at 60).
Under New York law, the party seeking to pierce a corporate veil must make a two-part showing: "(i) that the owner exercised complete domination over the corporation with respect to the transaction at issue; and (ii) that such domination was used to commit a fraud or wrong that injured the party seeking to pierce the veil."Diesel Props S.r.L. v. Greystone Bus. Credit II LLC, No. 07 Civ. 9580 (HB), 2008 WL 4833001, at *16-17 (S.D.N.Y. Nov. 5, 2008) (quoting Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 (2d Cir. 1997)).
With respect to the first prong, "[c]ontrol is the key. The parent must exercise complete domination in 'respect to the transaction attacked' so that the subsidiary had 'at the time' no separate will of its own. . . ." Id. (quoting Am. Protein Corp. v. AB Volvo, 844 F.2d 56, 60 (2d Cir. 1988)); see also Mouawad Nat'l Co., 476 F. Supp. 2d at 421. As to the second prong, "such domination must have been used to 'commit fraud or wrong' against plaintiff, which proximately caused plaintiffs injury." Diesel Props S.r.L., 2008 WL 4833001, at *18 (quotingAm. Protein Corp., 844 F.2d at 60). The party seeking to pierce the corporate veil must make "some showing of a wrongful or unjust act toward [it]." Morris v. N.Y. State Dep't of Taxation Fin., 82 N.Y.2d 135, 141 (1993).
In determining whether a parent exercised "complete domination" over its subsidiary, "courts consider such factors as: '(1) disregard of corporate formalities; (2) inadequate capitalization; (3) intermingling of funds; (4) overlap in ownership, officers, directors, and personnel; (5) common office space, address and telephone numbers of corporate entities; (6) the degree of discretion shown by the allegedly dominated corporation; (7) whether the dealings between the entities are at arms length; (8) whether the corporations are treated as independent profit centers; (9) payment or guarantee of the corporation's debts by the dominating entity, and (10) intermingling of property between the entities.'" See Mouawad Nat'l Co., 476 F. Supp. 2d at 421-22 (quoting MAG Portfolio Consult, GMBH v. Merlin Biomed Advisors, LLC, 268 F.3d 58, 63 (2d Cir. 2001)).
Here, BLD provides no basis for piecing the corporate veil. BLD has not alleged that Viacom disregarded corporate formalities, inadequately capitalized RPI, intermingled funds, treated RPI as an independent profit center, or otherwise dominated RPI. See Mouawad Nat'l Co., 476 F. Supp. 2d at 421-22 (quoting MAG Portfolio Consult, GMBH, 268 F.3d at 63). Nor has BLD alleged how any purported domination of RPI by Viacom was used to commit a fraud or wrong on BLD. See Diesel Props S.r.L., 2008 WL 4833001, at *18 (quoting Am. Protein Corp., 844 F.2d at 60). Accordingly, BLD's claims against Viacom will be dismissed.
While BLD argues (Pltf. Br. 19-21) that VH-1 personnel participated in the negotiations that led to the Agreement, and that the Agreement makes reference to VH-1 — for example, RPI agrees to "cause VH1.com to produce and maintain the official webpage for the Concert" (SAC, Ex. A (Agreement), ¶ 11(a) — this does not change the fact that the signatories to the Agreement are BLD and RPI. Moreover, the December 19, 2000 "preliminary letter" from a VH-1 representative to BLD's counsel — which discusses "VH1's production and exhibition of [the Concert]" — was clearly superseded by the March 8, 2001 Agreement, which explicitly provides that it "supersedes all prior understandings and agreements, whether oral or written, between the parties hereto relating to the subject matter herein." (Id. ¶ 23(a))
II. BLD'S BREACH OF WRITTEN CONTRACT CLAIM
BLD claims that RPI breached the Agreement by failing to (1) "engage a distributor . . . to manufacture, distribute] and market[] the audio and video recordings of the Concert" (SAC, ¶ 69); (2) "account for all sales and revenues and pay royalties to BLD" (id.); and (3) "provide plaintiff with the master recordings [of the Concert] for review and editing." (Id. ¶ 73)
As an initial matter, BLD cites nothing in the Agreement that requires RPI to provide master recordings of the Concert to BLD. The Court's independent review of the Agreement has likewise disclosed no provision that requires RPI to supply master recordings of the Concert to BLD. Accordingly, to the extent that BLD's breach of written contract claim is premised on RPI's failure to provide master recordings to BLD, that claim will be dismissed. The Court will now turn to BLD's two remaining breach arguments.
A. Failure to Engage a Distributor 1. BLD's Claim that the Agreement Imposes an Obligation on RPI to Engage a Distributor Survives a Motion to Dismiss
BLD's claim that RPI breached the Agreement by failing to engage a distributor is based on the following language: "RPI shall have the exclusive right and authority to solicit, negotiate, and execute [sic] a distributor (the "Distributor") to manufacture, distribute, advertise and promote . . . Phonorecords [of the Concert] in any audio or audio-visual format or configuration." (SAC, Ex. A (Agreement), ¶ 6) Many other clauses in the Agreement address the terms of the distribution agreement RPI will enter into. See, e.g., id. ¶¶ 6(a), 6(f), 6(i), 6(j), 6(m). RPI argues, however, that while RPI had the right to engage a distributor under the Agreement, it had no obligation to do so. (Def. Br. 17 (emphasis in original)) RPI is correct that no provision of the Agreement expressly imposes on it the obligation to retain a distributor.
Even where a contract does not reflect an express promise, however, courts will sometimes find an "implicit agreement" that a party will use reasonable efforts to bring about profits, at least where the contract grants exclusive distribution rights to the defendant and where neither party has anything to gain from the Agreement if either fails to perform. See, e.g., B. Lewis Prods., Inc. v. Angelou, No. 01 Civ. 0530 (MBM), 2005 WL 1138474, at *11 (S.D.N.Y. May 12, 2005) ("The repeated use of the language of exclusivity in the dealings between Angelou and BLP is further evidence that each party had a good faith obligation to perform under the Agreement"); Wood v. Lucy, Lady Duff Gordon, 222 N.Y. 88, 91 (1917) ("The implication of a promise here finds support in many circumstances. The defendant gave an exclusive privilege. She was to have no right for at least a year to place her own indorsements or market her own designs except through the agency of the plaintiff. The acceptance of the exclusive agency was an assumption of its duties." (emphasis in original) (citations omitted)) In such cases, courts "must assume that each party arguably has an obligation to make 'reasonable efforts' in furtherance of the Agreement in order to vindicate the 'business efficacy' that both parties must have contemplated when they entered the Agreement."B. Lewis Prods., Inc., 2005 WL 1138474, at *10 (quoting Wood, 222 N.Y. at 92).
In Wood, for example, the defendant, Lady Duff Gordon, agreed with plaintiff Wood that he would have the exclusive right to sell her designs, license them for others to market, and place her endorsement on designs of others. Wood, 222 N.Y. at 90. Under the agreement, Lady Duff Gordon was to receive one half of all profits and revenues derived from any contract Wood might make.Id. After Lady Duff Gordon breached the contract — by putting her endorsement on other products without Wood's knowledge — she claimed that her agreement with Wood was unenforceable because it failed to specify Wood's obligation to sell and market her designs. Justice Cardozo rejected that argument:
It is true that [Wood] does not promise in so many words that he will use reasonable efforts to place the defendant's indorsements and market her designs. We think, however, that such a promise is fairly to be implied. . . . A promise may be lacking, and yet the whole writing may be "instinct with an obligation," imperfectly expressed.Id. at 91. The court concluded that Wood's "promise to pay the defendant one-half of the profits and revenues resulting from the exclusive agency and to render accounts monthly[] was a promise to use reasonable efforts to bring profits and revenues into existence." Id. at 92.
The obligation implied in Wood is still imposed today in the exclusive distributorship context. For example, in B. Lewis Prods., Inc., 2005 WL 1138474, at *10-11, the court found that although the agreement at issue did not expressly impose an obligation on the defendant to provide any literary works for use in greeting cards, the parties had a "reciprocal duty of good faith under the Agreement" that "ensured that they would make reasonable efforts to perform":
[a]s was the case in Wood, it appears that the parties here intended to form a binding contract. Deficiencies or gaps in the Agreement regarding the parties' obligations may be filled by the obligation of good faith that each incurred upon signing it. As in Wood, the profit-sharing arrangement between the parties here meant that Angelou and BLP had nothing to gain from the Agreement if either failed to perform or gave minimal effort. Therefore we must assume that each party arguably had an obligation to make "reasonable efforts" in furtherance of the Agreement in order to vindicate the "business efficacy" that both parties must have contemplated when they entered the Agreement.Id. at * 10 (citing Wood, 222 N.Y. at 90, 92).
In interpreting the exclusive distributor language here, the Court must also consider the Agreement as a whole. See Maverick Tube Corp., 595 F.3d at 467 ("Where the parties dispute the meaning of particular contract clauses, the task of the court 'is to determine whether such clauses are ambiguous when read in the context of the entire agreement. . . .'" (quoting Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan, 7 F.3d 1091, 1095 (2d Cir. 1993) (internal quotations omitted))). "[A]s the Second Circuit has explained, 'an interpretation of a contract that has the effect of rendering at least one clause superfluous or meaningless . . . is not preferred and will be avoided if possible.'" Metro W. Asset Mgmt., LLC v. Magnus Funding, Ltd., No. 03 Civ. 5539 (NRB), 2004 WL 1444868, at *5 (S.D.N.Y. June 25, 2004) (quoting Galli v. Metz, 973 F.2d 145, 149 (2d Cir. 1992)); see also Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 63 (1995) ("a document should be read to give effect to all its provisions and to render them consistent with each other" (citations omitted)).
Here, finding that RPI has a right, but not an obligation, to select a distributor renders numerous clauses of the Agreement at least potentially meaningless. See, e.g., SAC, Ex. A (Agreement), ¶¶ 6(a), 6(f), 6(i), 6(j), 6(m). RPI argues that the Wood line of cases is not applicable because BLD received other benefits under the Agreement and did not "mak[e] itself wholly dependent on [RPI's] efforts [for its survival]." (Def. Br. 21-22) RPI further contends that where the parties intended in the Agreement to impose a "best efforts" or "reasonable efforts" requirement, the Agreement clearly articulates that obligation. (Pltf. Br. 22 (citing SAC, Ex. A (Agreement), ¶¶ 1(d)(vii), 1(h)) While RPI's arguments are not without force, this issue cannot be resolved as a matter of law at the motion to dismiss stage. Accordingly, BLD's breach claim as to the failure to retain a distributor will not be dismissed on the ground that the Agreement imposes no such obligation on RPI.
2. BLD's Distributor Claim Is Time-Barred
Under CPLR § 213(2), "an action upon a contractual obligation or liability, express or implied," "must be commenced within six years." N.Y. CPLR § 213(2). "In general, the limitations period begins to run when the cause of action accrues." Guilbert v. Gardner, 480 F.3d 140, 149 (2d Cir. 2007) (citing N.Y. CPLR § 203(a)). "A cause of action for breach of contract ordinarily accrues and the limitations period begins to run upon breach."Id. (citing Ely-Cruikshank Co. v. Bank of Montreal, 599 N.Y.S.2d 501 (1993)). "The plaintiff need not be aware of the breach or wrong to start the period running." Id. (citing Ely-Cruikshank Co. v. Bank of Montreal, 81 N.Y.2d 399, 402 (1993)).
"'The statute of limitations was enacted . . . to prevent the bringing of stale claims and to protect defendants from the fear of unexpected litigation.'" Hutchinson v. City of New York, No. 07 Civ. 841 (RJD) (CLP), 2010 WL 1437926, at *4 (E.D.N.Y. Feb. 8, 2010) (quoting Afrika v. Selsky, 750 F. Supp. 595, 599 (S.D.N.Y. 1990)). A statute of limitations "limit[s] the circumstances in which a reviewing court can grant relief," Enterprise Mortg. Acceptance Co., Sec. Litig. v. Enter. Mortg. Acceptance Co., 391 F.3d 401, 409 (2d Cir. 2004) (citations omitted), and "creates an affirmative defense where plaintiff failed to bring suit within a specified period of time after his cause of action accrued. . . ." Ma v. Merrill Lynch, Pierce, Fenner Smith, Inc., 597 F.3d 84, 88 n. 4 (2d Cir. 2010).
Here, assuming arguendo that the Agreement requires RPI to engage a distributor, it does not indicate when RPI must perform that obligation. "Where a contract does not specify a date or time for performance, New York law implies a reasonable time period." Id. (citing Schmidt v. McKay, 555 F.2d 30, 35 (2d Cir. 1977); RCN Telecom Servs., Inc. v. 202 Ctr. St. Realty LLC., 156 F. App'x 349, 351 (2d Cir. 2005) ("When a contract does not supply a time for performance, it must be done within a 'reasonable time.'" (quoting Smith Barney Harris Upham Co. v. Liechtensteinische Landesbank, 866 F. Supp. 114, 117 (S.D.N.Y. 1994)); Lituchy v. Guinan Lithographic Co., 60 A.D.2d 622. (2d Dept. 1977)).
RPI contends that this aspect of BLD's breach claim is time-barred, because the Agreement was entered into in March 2001 and the SAC alleges that RPI breached the distributor obligation as early as November 2001. (Def. Br. 6-7) Because this action was not filed until March 23, 2010, long after the six-year statute of limitations expired, Defendants argue that BLD's claims are time-barred. (Id.)
BLD argues that its breach claims are timely because: (1) the Agreement was not finalized until 2006 (Pltf. Br. 8-9; SAC, ¶ 24); (2) RPI acknowledged its contractual obligations when it signed the Agreement in 2006, and the statute of limitations "re-started" under NY Gen. Oblig. Law § 17-101 (Pltf. Br. 12-13); and (3) the Agreement imposes a continuing obligation on RPI to engage a distributor. (Id. at 10-12) None of these arguments is persuasive in light of the facts pleaded in the SAC.
a. The SAC Does Not Plead Facts Demonstrating that the Agreement was Finalized in 2006
The SAC alleges that the Agreement "was the culmination of years of negotiations," and that "[a]lthough the parties began negotiating in 1999 and the Concert aired in 2001, the[] [parties] did not finalize their Agreement until in or about 2006." (SAC, ¶ 24) Accordingly, BLD argues that its breach of contract claims were not ripe until 2006. (Pltf. Br. 7-10)
While this Court is generally required, on a motion to dismiss, to accept a complaint's factual allegations as true, see Kassner, 496 F.3d at 237, this Court need not accept factual allegations that are conclusory, implausible, or contradicted by exhibits to a complaint. The Court is likewise not required to accept an allegation that "tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Iqbal, 129 S. Ct. at 1949 (quotingTwombly, 550 U.S. at 557). "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 1950 (citing Twombly, 550 U.S. at 556).
Here, the Agreement attached to the SAC bears only one date — March 8, 2001. (SAC, Ex. A (Agreement) at 1) Moreover, while BLD alleges, in a conclusory fashion, that the parties engaged in "years of negotiation" after the April 2001 concert, BLD cites no facts supporting that allegation. To the extent that the SAC and its exhibits allude to the parties' negotiations, those negotiations all occurred prior to March 2001. (See SAC, ¶¶ 30-33; Ex. B (Dec. 19, 2000 Ltr.)) Indeed, BLD's November 30, 2001 letter to a VH1 representative — attached as Exhibit C to the SAC — does not allude to any negotiations regarding the Agreement and implies that all that is left to do is to edit the concert tape and select a distributor. (Id., Ex. C (Nov. 30, 2001 Ltr.) ("[P]lease note that there are editing and audio changes that need to be made to the program before it is released to any DVD distributor . . . I will coordinate my schedule with that of Ms. Franklin and the selected distributor so as to accommodate making these corrections as expeditiously as possible."))
Given that the Agreement is dated March 8, 2001, and given BLD's failure to plead any facts demonstrating that contract negotiations continued after 2001, this Court concludes that the written Agreement dated March 8, 2001 is a "manifestation of mutual assent sufficiently definite to assure that the parties were truly in agreement with respect to all material terms" in 2001 and that the Agreement was finalized in 2001. See Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487 F.3d 89, 95 (2d Cir. 2007) (citations omitted).
BLD's allegation that RPI did not return a signed copy of the Agreement until "in or about 2006" (SAC, ¶ 38), does not change the result. "In accordance with ordinary principles of contract law, '[t]he critical issue is not whether the [agreement] was signed by the party sought to be charged . . . but whether there was a meeting of the minds of the parties as to the essential terms of the agreement, even though unsigned by one party.'"Nat'l City Golf Fin. v. Higher Ground Country Club Mgmt. Co., LLC, 641 F. Supp. 2d 196, 203 (S.D.N.Y. 2009) (citing A/S Custodia v. Lessin Int'l., Inc., 503 F.2d 318, 320 (2d Cir. 1974)). Accordingly, the critical issue is not whether the parties signed the Agreement in 2001; rather, it is whether there "was a meeting of the minds of the parties as to the essential terms of the agreement" in 2001. See id. (citing A/S Custodia, 503 F.2d at 320); see also Specht v. Netscape Commc'ns Corp., 150 F. Supp. 2d 585, 587 (S.D.N.Y. 2001) ("Promises become binding when there is a meeting of the minds and consideration is exchanged. . . . Assent may be registered by a signature, a handshake, or a click of a computer mouse transmitted across the invisible ether of the Internet. Formality is not a requisite; any sign, symbol or action, or even willful inaction . . . may create a contract."); Earthtrade, Inc. v. General Brands Int'l Corp., No. 95 Civ. 8913 (LMM), 1996 WL 63067, at *5 (S.D.N.Y. Feb. 14, 1996) ("'The critical issue is . . . whether there was [a] meeting of the minds of the parties as to the essential terms of the agreement, even though unsigned by one party.' Thus, absence of a signature can be rectified by evidence that the parties in fact agreed to be bound by the contract." (quoting A/S Custodia, 503 F.2d at 320)). Accordingly, the timeliness of BLD's breach claim will be determined based on the Court's finding that the Agreement was formed in March 2001.
b. Gen. Oblig. Law § 17-101 Is Not Applicable
Citing to Section 17-101 of the New York General Obligations Law, BLD argues that even if the Agreement is deemed effective as of March 8, 2001, RPI "reaffirm[ed] the essential terms" of the Agreement and effectively "re-start[ed] the limitations period" by signing the Agreement in 2006. (Pltf. Br. 12 (citing SAC, ¶ 38)) BLD's contention that "[a] breach of contract claim is revived [under Gen. Oblig. Law § 17-101] when a defendant signs a document acknowledging its obligations" (Pltf. Br. 12) is simplistic and overbroad, however. BLD cites no case — and this Court's research has revealed no case — suggesting that Gen. Oblig. Law § 17-101 is applicable here.
Section 17-101 provides that:
An acknowledgment or promise contained in a writing signed by the party to be charged thereby is the only competent evidence of a new or continuing contract whereby to take an action out of the operation of the provisions of limitations of time for commencing actions under the civil practice law and rules. . . .
N.Y. Gen. Oblig. Law § 17-101. "This statute recognizes an exception to the general rule, which bars an action commenced after the statute of limitations period, 'when a debtor, before or after the expiration of the period of limitations, makes a new promise to pay his debt or when he acknowledges the debt in such a way as to imply an intention to pay it.'" Anonymous v. Anonymous, 172 A.D.2d 285, 287 (1st Dept. 1991) (quoting 1 Weinstein-Korn-Miller, N.Y. Civ. Prac. § 201,14); see also Koeben v. Altchek, No. 94 CIV. 8484 (PKL), 1997 WL 83290, at *3 (S.D.N.Y. Feb. 26, 1997) ("Under [section 17-101 of New York General Obligations Law], an express written promise to pay an existing debt starts the running of the statute of limitations anew. In order to satisfy the requirements of this section, a writing must: (1) be signed by the debtor; (2) recognize an existing debt; and (3) contain nothing inconsistent with an intention on the part of the debtor to pay it." (citations omitted)).
"In determining the effectiveness of an acknowledgment, the critical determination is whether the acknowledgment imports an intention to pay.'" In re Brill, 318 B.R. 49, 54 (Bkrtcy. S.D.N.Y. 2004) (citing Knoll v. Datek Secs. Corp., 2 A.D.3d 594 (2d Dept. 2003)). Furthermore, "[a]n acknowledgment of an existing debt and the intent to pay the same must . . . be unconditional," and "[i]f any condition must be satisfied prior to payment being made, the creditor must show that the condition has been satisfied before application of the toll embodied in § 17-101." Faulkner v. Arista Records LLC, 602 F. Supp. 2d 470, 479 (S.D.N.Y. 2009) (citing In re Brill, 318 B.R. at 54).
Here, in the Agreement, RPI does not unconditionally acknowledge "an existing debt," see Koeben, 1997 WL 83290, at *3 (citing N.Y. Gen. Oblig. § 17-101), nor does it demonstrate an unconditional intention to pay such a debt. See Faulkner, 602 F. Supp. 2d at 479 (citing In re Brill, 318 B.R. at 54). Accordingly, assuming arguendo that RPI signed the Agreement in 2006, that execution did not "take [the] action out of the operation of the provisions of limitations of time for commencing actions under the civil practice law." See N.Y. Gen. Oblig. § 17-101. c. RPI Did Not Have a Continuing Obligation to Engage a Distributor
As discussed above, assuming arguendo that RPI had an obligation under the Agreement to engage a distributor, the Agreement does not provide when that obligation must be performed. Under such circumstances, "New York law implies a reasonable time period." Guilbert, 480 F.3d at 149 (citingSchmidt v. McKay, 555 F.2d 30, 35 (2d Cir. 1977); Lituchy v. Guinan Lithographic Co., 60 A.D.2d 622 (2d Dept. 1977)). Given that the SAC pleads that RPI had an obligation to "promptly" select a distributor (SAC, ¶ 37), this Court concludes that BLD's breach claim accrued in 2001.
BLD has pleaded no facts suggesting that application of the continuing or successive breach doctrine is appropriate here. BLD alleges that RPI had an obligation to secure a distributor and was required to do so "promptly" after the Agreement was entered into in March 2001. If RPI committed a breach in not engaging a distributor, it was a one-time breach and the breach claim accrued in 2001.
* * * *
Because (1) a six-year statute of limitations applies to BLD's written contract claim; (2) BLD's claims accrued in 2001; and (3) this action was not filed until March 2010, BLD's claim for breach of a written contract is time-barred to the extent it is based on RPI's alleged failure to secure a distributor. BLD's quasi contract claims and claim for breach of an oral contract are subject to the same six-year statute of limitations. Those claims are likewise time-barred to the extent they are based on RPI's alleged failure to secure a distributor. B. Failure to Account for Sales, Revenues, and Royalties
See Flight Sciences, Inc. v. Cathay Pac. Airways Ltd., 647 F. Supp. 2d 285, 288 (S.D.N.Y. 2009) ("claims for breach of the covenant of good faith and fair dealing . . . are . . . subject to a six-year statute of limitations"); Gelfman Int'l Enters, v. Miami Sun Int'l Corp., No. 05-CV-3826 (CPS) (RML), 2009 WL 2242331, at *5 n. 15 (E.D.N.Y. July 27, 2009) ("New York law provides a six year statute of limitations for breach of contract, quantum meruit, promissory estoppel, unjust enrichment, and accounting claims."); Abdrabo v. State of N.Y.-Worker Comp. Bd., No. 03 Civ. 7690 (DLC), 2005 WL 1278539, at *2 (S.D.N.Y. May 27, 2005) ("The statute of limitations for a promissory estoppel claim is six years." (citing N.Y. CPLR § 213(2))); Sirohi v. Trs. of Columbia Univ., No. 94-CIV-6165 (JFK), 1996 WL 71504, at *6 (S.D.N.Y. Feb. 20, 1996) (applying six-year statute of limitations to breach of oral contract claim).
BLD's claim that RPI breached its obligation under the Agreement to render an accounting is premised on the following contract language:
Each party shall pay the other their respective portion of Net Proceeds, together with a detailed accounting statement on a calendar semi-annual basis, not later than ninety (90) days after the expiration of each such calendar semi-annual period.
(SAC, Ex. A (Agreement), ¶ 8(c))
In the SAC, BLD alleges that RPI has made "very limited sales of international versions of the as-aired Concert," that RPI is obligated to pay BLD 40% of the "Net Proceeds" from these sales, and that BLD "has asked [RPI] to account for international sales of the as-aired Concert" but that RPI has "refused to provide any sales revenue information." BLD also alleges that RPI has "not paid BLD any fees, royalties or other monies in connection with the as-aired tape or the distribution of any audio or video recordings of the Concert." (SAC. ¶¶ 46-49)
The Court concludes that the language of Paragraph 8(c) set forth above is both garbled and ambiguous. While this provision refers to the preparation of "a detailed accounting statement on a calendar semi-annual basis," it is not clear whether one party has, or both parties have, this obligation, nor is it clear what the "detailed accounting statement" must reflect. The meaning of this provision cannot be resolved as a matter of law.
If the Agreement imposes an obligation on RPI to issue "a detailed accounting statement [to BLD] on a semi-annual basis," a claim of breach relating to this provision would likely not be barred by the statute of limitations. Where "a contract requires continuing performance over a period of time, each successive breach may begin the statute of limitations running anew." Guilbert, 480 F.3d at 150 (citing Bulova Watch Co. v. Celotex Corp., 415 N.Y.S.2d 817 (1979); Stalis v. Sugar Creek Stores, Inc., 295 A.D.2d 939 (4th Dept. 2002); Orville v. Newski, Inc., 155 A.D.2d 799 (3rd Dept. 1989); Airco Alloys Div. v. Niagara Mohawk Power Corp., 76 A.D.2d 68 (4th Dept. 1980)); see also Faulkner, 602 F. Supp. 2d at 474, 478 (denying defendant's motion to dismiss breach of contract claim where defendant's duty to pay royalties to a music group "had no set end date" and thus "was a continuing obligation," and where "[u]nder the Agreement, [defendant] was to render royalty statements to Plaintiffs twice a year")
See also Guilbert, 480 F.3d at 150 ("Because Defendants' obligation to contribute $10,000 per year to Plaintiff's pension fund was a continuing one, Plaintiff's claim that Defendants breached that obligation within six years of the commencement of this action is timely."); Orville v. Newski, Inc., 155 A.D.2d 799, 801 (3rd Dept. 1989) (holding that where the contract had no set term and required yearly minimum payments, "a breach of the contract occurred each year in which defendant failed to make the minimum payment, and because the obligation is a continuing one, defendant's Statute of Limitations claim is without merit").
Accordingly, RPI's motion to dismiss BLD's breach of written contract claim is denied to the extent that claim is based on RPI's failure to render an accounting and make payments required under Paragraph 8 of the Agreement.
RPI contends that Paragraph 8(c) of the Agreement sets a one-year limit on BLD's time to bring a claim under this provision. (Def. Br. 12 (citing SAC, Ex. A (Agreement) ¶ 8(c)) The one-year limit in Paragraph 8(c), however, concerns objections to an accounting statement that has been received. (SAC, Ex. A (Agreement), ¶ 8(c) ("each party shall notify the other of any specific objection to any accounting statement within one (1) year after such party's receipt thereof. . . ." (emphasis added)) Here, of course, BLD claims that it never received any accounting statements. (SAC, ¶¶ 46-49)
III. BLD'S BREACH OF ORAL CONTRACT CLAIM WILL BE DISMISSED
Accordingly to the SAC (see SAC, ¶¶ 24, 63-64), the parties entered into a written contract — the Agreement — after having made an oral agreement. Under such circumstances, the written agreement supersedes any prior oral agreement. See, e.g., Indep. Energy Corp. v. Trigen Energy Corp., 944 F. Supp. 1184, 1195 (S.D.N.Y. 1996) (finding that the later written "agreement supersedes any rights plaintiff may have had under the prior oral agreement"; "[u]nder New York law, a subsequent contract regarding the same subject matter supersedes the prior contract" (citing Barnum v. Millbrook Care Ltd. Partnership, 850 F. Supp. 1227, 1236 (S.D.N.Y. 1994));Ottawa Office Integration Inc. v. FTF Business Systems, Inc., 132 F. Supp. 2d 215, 219 (S.D.N.Y. 2001) ("It is a well settled principle of contract law that a new agreement between the same parties on the same subject matter supersedes the old agreement."); Shapiro v. Shapiro, 116 Misc.2d 40, 44 (Sup. Ct. N.Y. Cty. 1982)); Private One of N.Y., LLC v. JMRL Sales Serv., Inc., 471 F. Supp. 2d 216, 223 (E.D.N.Y. 2007). This is a fortiori true where the written agreement, as here, contains the following integration clause: "[t]his Agreement, and the exhibits attached hereto, contain the entire understanding and supersedes all prior understandings and agreements, whether oral or written, between the parties hereto relating to the subject matter herein. . . ." (SAC, Ex. A (Agreement), ¶ 23(a)) This clause requires dismissal of any claim founded on the earlier alleged oral agreement between the parties. See, e.g., Torres v. D'Alesso, 80 A.D.3d 46, 53 (1st Dept. 2010) ("Merger clauses are not mere boilerplate. They provide further protection for the interests of certainty and finality. The merger clause in the present case specifies that "[a]ll prior understandings, agreements, representations and warranties, oral or written, between Seller and Purchaser are merged in this contract," and that the document "completely expresses their full agreement . . ., neither party relying upon any statement made by anyone else that is not set forth in this contract." Consequently, any claimed prior oral condition or agreement was necessarily extinguished at the moment the written contract became fully executed by both parties. At that point, the buyer could not expect to rely on any previous understanding or oral representation that was not included in the mutually executed written document." (emphasis in original)).
Accordingly, BLD's claim for breach of an oral contract will be dismissed.
IV. BLD'S CLAIM FOR BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING WILL BE DISMISSED
BLD's claim for breach of the implied covenant of good faith and fair dealing is based on the same conduct underlying its breach of contract claims — RPI's failure to retain a distributor. See SAC, ¶¶ 78-79. Under such circumstances, the good faith and fair dealing claim must be dismissed.
"[T]here exists under New York law an implied covenant of good faith and fair dealing, pursuant to which neither party to a contract shall do anything which has the effect of destroying or injuring the right of the other party to receive the fruits of the contract." M/A-Com Security Corp. v. Galesi, 904 F.2d 134, 136 (2d Cir. 1990). "[W]here a party's acts subsequent to performance on the contract so directly destroy the value of the contract for another party that the acts may be presumed to be contrary to the intention of the parties, the implied covenant of good faith may be implicated." Id. "An implied covenant of good faith and fair dealing . . . arises out of the known reasonable expectations of the other party which arise out of the agreement entered into. The covenant does not create duties which are not fairly inferable from the express terms of that contract."Interallianz Bank AG v. Nycal Corp., No. 93 Civ. 5024 (RPP), 1994 WL 177745, at *8 (S.D.N.Y. May 6, 1994) (citing Fasolino Foods Co. v. Banca Nazionale del Lavoro, 961 F.2d 1052, 1056 (2d Cir. 1992)). "In other words, 'such a claim may be brought, if at all, only where one party's conduct, though not breaching the terms of the contract in a technical sense, nonetheless deprived the other party of the benefit of its bargain.'" Pearce v. Manhattan Ensemble Theater, Inc., 528 F. Supp. 2d 175, 180-81 (S.D.N.Y. 2007) (quoting Sauer v. Xerox Corp., 95 F. Supp. 2d 125, 132 (W.D.N.Y. 2000)).
"[A]s a general rule, the cause of action alleging breach of good faith is duplicative of a cause of action alleging breach of contract." Alter v. Bogoricin, No. 97 Civ. 0662 (MBM), 1997 WL 691332, at *7 (S.D.N.Y. Nov. 6, 2007) (citations and internal quotation marks omitted)). "[R]aising both claims in a single complaint is redundant, and courts confronted with such complaints under New York law regularly dismiss any freestanding claim for breach of the covenant of fair dealing." Jordan v. Verizon Corp., No. 08 Civ. 6414 (GEL), 2008 WL 5209989, at *7 (S.D.N.Y. Dec. 10, 2008) (collecting cases and dismissing claim for breach of implied covenant of good faith and fair dealing without leave to replead).
See also Long v. Marubeni Am. Corp., No. 05 Civ. 0639 (GEL), 2006 WL 1716878, at *1 (S.D.N.Y. June 20, 2006) (rejecting plaintiffs' assertion that good faith and fair dealing claim arose from different facts and sought different damages because "to the extent this alleged unlawful conduct constituted a breach of an implied contract term, plaintiffs' allegations [were] subsumed under the breach-of-contract claim and may not constitute an entirely separate, and duplicative, cause of action"); Concesionaria DHM, S.A. v. International Finance Corp., 307 F. Supp. 2d 553, 564 (S.D.N.Y. 2004) (dismissing claim for alleged breach of implied duty of good faith and fair dealing where "[t]he predicate conduct for the claims [was] the same, despite the attempt to emphasize different aspects of the conduct in the implied covenant claim"); Cary Oil Co., Inc. v. MG Ref. Mktg., Inc., 90 F. Supp. 2d 401, 419 (S.D.N.Y. 2000) ("Under New York law, a claim for breach of the implied covenant will be dismissed as duplicative if the conduct allegedly violating the implied covenant is also the predicate for breach of the underlying contract."); W.S.A., Inc. v. ACA Corp., Nos. 94 Civ. 1868 (CSH), 94 Civ. 1493 (CSH), 1996 WL 551599, at *9 (S.D.N.Y. Sept. 27, 1996) ("The fact that [plaintiff] has bifurcated its breach of contract claim, so as to place some of the allegations in support thereof in the category of 'breach of covenant of fair dealing,' does not grant it two separate causes of action."),modified on other grounds, 1996 WL 735508 (Dec. 20, 1996)).
"[A] claim for breach of the implied covenant of good faith can survive a motion to dismiss 'only if it is based on allegations different from those underlying the accompanying breach of contract claim.'" Grand Heritage Mgmt., LLC v. Murphy, No. 06 Civ. 5977 (NRB), 2007 WL 3355380, at *6 (S.D.N.Y. Nov. 5, 2007) (quoting Siradas v. Chase Lincoln First Bank., N.A., No. 98 Civ. 4028 (RCC), 1999 WL 787658, at *6 (S.D.N.Y. Sept. 30, 1999)). Because BLD's claim for breach of the implied covenant of good faith and fair dealing is not "'based on allegations different from those underlying the accompanying breach of contract claim,'" the good faith and fair dealing claim must be dismissed. See Grand Heritage Mgmt., LLC, 2007 WL 3355380, at *6 (quoting Siradas, 1999 WL 787658, at *6).
V. BLD'S PROMISSORY ESTOPPEL CLAIM WILL BE DISMISSED
A promissory estoppel claim may proceed jointly with a breach of contract claim only where it is not clear that a valid contract exists:
"The existence of a valid contract will generally preclude quasi-contract claims," Stillman v. Townsend, No. 05 Civ. 6612 (WHP), 2006 WL 2067035, *6 (S.D.N.Y. Jul. 26, 2006). As such, these claims may only proceed should the Court find that no valid contract exists. See also R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 60 (2d Cir. 1997) ("[claims for unjust enrichment or quantum meruit] are non-contractual, equitable remedies that are inapplicable if there is an enforceable contract governing the subject matter"); International CableTel Inc. v. Le Groupe Videotron Ltee, 978 F. Supp. 483, 487 (S.D.N.Y. Sep. 19, 1997) ("A valid contract governing a particular matter precludes a recovery in quasi-contract for events arising out of the same subject matter."); Violette v. Armonk Assocs., L.P., 872 F. Supp. 1279, 1282 (S.D.N.Y. 1995) ("A quasi contract only applies in the absence of an express agreement. . . ."). "If it has not yet been determined whether there is a valid contract between the parties then recovery under quasi-contract theories may be proper and thus dismissal is not appropriate." Indep. Energy Corp. v. Trigen Energy Corp., 944 F. Supp. 1184, 1200 (S.D.N.Y. 1996).Adams v. Labaton, Sucharow Rudoff LLP, No. 07 Civ. 7017 (DAB), 2009 WL 928143, at *7 (S.D.N.Y. Mar. 20, 2009).
Because it is undisputed that a valid contract exists between the parties that governs their dispute, BLD's promissory estoppel claim will be dismissed.
CONCLUSION
For the reasons stated above, Defendant Viacom's motion to dismiss is GRANTED in its entirety. Defendant RPI's motion to dismiss is GRANTED as to Counts One, Three, and Four of the Second Amended Complaint. Defendant RPI's motion to dismiss Count Two is GRANTED to the extent Count Two is based on RPI's alleged failure to engage a distributor and to produce master recordings of the Concert to BLD, but is DENIED to the extent Count Two is based on RPI's alleged failure to provide an accounting to BLD and to pay any royalties due BLD under Paragraph 8 of the Agreement.The Clerk of the Court is directed to terminate the following motion: Docket No. 15.
SO ORDERED.