CK Media, LLC v. Primedia Spec. Interest Publ'n

Full title: CK MEDIA, LLC, Plaintiff, v. PRIMEDIA SPECIAL INTEREST PUBLICATIONS, INC.…

Court: Supreme Court of the State of New York, New York County

Date published: Sep 19, 2008

2008 N.Y. Slip Op. 32630 (N.Y. Sup. Ct. 2008)

Opinion

No. 0604207/2007.

September 19, 2008.

[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] CHARLES E. RAMOS, Judge.

Defendants Primedia Special Interest Publications Inc. and Primedia, Inc. (together, Primedia) move to dismiss the complaint (CPLR 3211 [a] [1], [7]; 3016 [b]) .

Background¹

1 The facts set forth herein are taken from the pleadings, unless otherwise noted.

This is an action for the alleged breach of representations and warranties by Primedia in connection with its sale of Crafts Magazine (the Assets) to CK Media. In early 2006, CK Media and Primedia began negotiations for the sale of the Assets to CK Media and entered into an Asset Purchase Agreement (Purchase Agreement). In connection with the sale, Primedia provided CK Media with information and records that reflected the business's financial standing and operations, and made express representations and warranties in the Purchase Agreement concerning the accuracy of the information. Additionally, the purchase price of the Assets was determined by applying a multiple to a measure of the financial performance of the business, that was based solely on financial statements provided to CK Media from Primedia.

CK Media alleges that subsequent to the sale, it uncovered numerous inaccuracies in the financial statements delivered to CK Media, including the failure to report certain expenses and liabilities that the business had incurred. Additionally, CK Media alleges that Primedia overstated the revenue of the business, and the manner and price at which the business acquired paper.

As a result of these false statements, CK Media alleges that Primedia was able to inflate the purchase price of the Assets paid by CK Media by at least $20 million.

The complaint asserts causes of action for breach of warranty, breach of the covenant of good faith and fair dealing and express indemnity. CK Media has withdrawn its claim for breach of covenant of good faith and fair dealing (July 17, 2008 Transcript, 20:5-11).

Discussion

Primedia moves to dismiss the complaint for failure to state a cause of action, on the basis of documentary evidence, and for failure to plead with requisite particularity.

For the reasons stated below, affording the complaint a liberal construction, accepting the facts alleged as true and according CK Media the benefit of every favorable inference (Allianz Underwriters Ins. Co. v Landmark Ins. Co., 13 AD3d 172, 174 [1^st Dept 2004]), the facts alleged support causes of action for breach of warranty and indemnification. Primedia contends that CK Media failed to plead its claims for breach of warranty and indemnification with particularity, as required by CPLR 3016 (b). However, the heightened pleading standard set forth in CPLR 3016 (b) applies to claims or defenses based upon misrepresentation, fraud, and breach of trust. The general pleading standard set forth in CPLR 3013, that requires statements in pleadings to be sufficiently particular to give the court and the parties notice of the claims, applies to claims for breach of warranty and indemnification (see Hicksville Dry Cleaners, Inc. v Stanley Fastening Sys., 37 AD3d 218 [1^st Dept 2007]) .

The complaint adequately sets forth specific factual references to the terms of a written warranty, including that Primedia made affirmations of fact and promises regarding the financial condition of the business in the Purchase Agreement, that was used to determined the purchase price of the Assets (Complaint ¶¶ 12-27). Further, CK Media adequately alleges that the condition of the Assets do not conform to Primedia's representations ( id.). Otherwise, CK Media should be afforded an opportunity to conduct discovery in order to flush out the details of its claim.

In addition, CK Media adequately pled a claim for express indemnity, based upon an indemnity clause contained in the Purchase Agreement. The Purchase Agreement states that Primedia shall indemnify CK Media for "any and all damages . . .liabilities, costs and expenses (including . . .reasonable legal fees . . .) that arise from or relate or are attributable to . . .[any] breach of a representation or warranty by Seller [Primedia] under this Agreement" (Purchase Agreement, § 8.02 [a]).

Primedia's remaining arguments are without merit.

Accordingly, it is

ORDERED that defendants' motion to dismiss is denied; and it is further

ORDERED that defendants are directed to serve an answer to the complaint within 10 days after service of a copy of this order with notice of entry. Dated: September 19, 2008