Opinion
160593/2015
02-24-2016
Lisa DePaulo, Plaintiff, v. Jeanine Pirro, Defendant.
Atty for Plaintiff Richard Emery, Esq. Emery Celli Brinkerhoff and Abady, LLP New York, NY 10019 212-763-5000 Atty for Defendant Richard E. Weill, Esq. Boies Schiller & Flexner, LLP 333 Main Street Armonk, NY 10504 914-749-8300
Atty for Plaintiff Richard Emery, Esq. Emery Celli Brinkerhoff and Abady, LLP New York, NY 10019 212-763-5000 Atty for Defendant Richard E. Weill, Esq. Boies Schiller & Flexner, LLP 333 Main Street Armonk, NY 10504 914-749-8300 Alice Schlesinger, J.
This action, one for breach of contract, concerns the fallout of a failed collaboration between Jeanine Pirro, the former Westchester County District Attorney-turned-author and television personality, and Lisa DePaulo, a writer and journalist, regarding Pirro's most recent book. Before the court is a motion by Pirro to compel arbitration of the parties' dispute.
Pirro and DePaulo met in the spring of 1999 when DePaulo interviewed Pirro for a story in the New York Times Magazine. A common thread in the parties' relationship is Robert Durst, a scion of the Durst real estate empire, who was the primary suspect in his wife Kathleen's 1982 disappearance and in two other homicides. Pirro spent 15 years investigating Kathleen's disappearance while at the District Attorney's Office, and DePaulo has written several stories on the investigation throughout her lengthy career. Durst, although arrested on numerous occasions (and tried for one of the homicides), has not, as of this decision, been convicted of any homicide. In 2015, HBO aired an in-depth documentary entitled "The Jinx: The Life and Deaths of Robert Durst." Thereafter, Durst was arrested on a murder charge relating to one of the aforementioned homicides.
"[B]ecause of her widely recognized expertise on the Durst story," DePaulo subsequently "made a slew of television appearances on programs covering Robert's story, including Morning Joe, The Today Show, Hardball, Dateline, and 48 Hours, as well as [Pirro's] Fox News television show Justice with Judge Jeanine." Complaint at ¶ 49. DePaulo later pitched an idea to interview Pirro to her employer, Bloomberg News, which accepted the pitch and aired an interview between the two on March 13, 2015. Complaint at ¶ 48.
After the interview, Pirro "approached [DePaulo] to propose co-writing a book about what [Pirro] characterized as her fifteen-year pursuit of Robert." Complaint at ¶ 51. Pirro had already contracted with Simon & Schuster, Inc. to write this book. Pirro Aff., ¶¶ 4-5. The parties agreed to the terms of their collaboration in a Work for Hire Agreement dated April 23, 2015 (the "Work for Hire Agreement"). See Work for Hire Agreement, Pirro Aff., Ex. "1."
The Work for Hire Agreement provided that Pirro would pay DePaulo $37,500 upon its execution, and a second payment of $37,500 upon completion of the book. It is undisputed that Pirro made the first payment.
The Work for Hire Agreement also contained the following arbitration clause: Pirro and DePaulo agree to negotiate in good faith to resolve any dispute or claim arising with respect to this Agreement. Any dispute or claim that Pirro and DePaulo are unable to promptly resolve shall be settled by arbitration to be conducted in the State of New York under the rules and procedures of the American Arbitration Association for commercial disputes, and the decision of the arbitration shall be binding upon both parties. Judgment may be entered upon such an award in any court of competent jurisdiction.
Pirro Aff., Ex "1," ¶ 15.
The collaboration never really got off the ground. The reasons for this are hotly and fastidiously contested. But at this juncture, the court need not summarize the details of each party's position in this regard. For purposes of this motion, all that must be known is that both DePaulo and Pirro allege the other failed to perform under the Work for Hire Agreement. Compare Complaint at ¶¶ 63-104, with Pirro Aff. at ¶¶ 5-25. On June 16, 2015, Pirro terminated the collaboration, and did not make the second $37,500 payment. See Complaint at ¶ 103.
Pirro eventually went on to complete her book (entitled He Killed Them All: Robert Durst and My Quest for Justice) with another collaborator, releasing it in November 2015.
Following DePaulo's termination, and pursuant to the Work for Hire Agreement, the parties "negotiate[d] terms to resolve any outstanding dispute over [DePaulo's] improper termination and [Pirro's] desire to purchase a license to use [DePaulo's] intellectual property in her book." Complaint at ¶ 112. According to DePaulo, "[a]fter several weeks of further negotiations, [DePaulo] made a final offer, through counsel, to release any claims arising out of [Pirro's] breaches of the terms of her collaboration with [DePaulo] and to provide [DePaulo] with a limited license to use [DePaulo's] intellectual property in [Pirro's] book in exchange for a single payment of $28,750." Complaint at ¶ 114.
This "final offer" purportedly made by DePaulo is not memorialized in any exhibits before this Court. Nonetheless, DePaulo's counsel has submitted Pirro's purported "acceptance," which consists of the following email sent by Pirro's former attorney on August 12, 2015: After considerable discussion with the appropriate parties in interest the settlement you have requested is ACCEPTED subject to agreement on the Termination Agreement. The license agreement language will be written by S & S, it will have to run through expiration of the copyright on the Book (as I have been advised).
DePaulo Af.., Ex "C."
DePaulo argues that the August 12 email constituted Pirro's "acceptance of [DePaulo's] proposed terms," thereby creating an "enforceable contract." Complaint at ¶ 122. In contrast, Pirro maintains that "the parties never came to an agreement on the Termination Agreement,'" Pirro Aff. at ¶ 22, and therefore, "no enforceable contract was formed." Pirro Memo. of Law at 7-8.
Thereafter, DePaulo commenced the instant action, alleging Pirro's breach of the purported August 12 "settlement agreement." To be clear, DePaulo's position, at this stage, is not based on a claim for breach of the Work for Hire Agreement. In response, Pirro moved to compel arbitration pursuant to the arbitration clause in paragraph 15 of the Work for Hire Agreement. In Pirro's view, all of DePaulo's assertions in the complaint, including the claim for breach of the purported settlement agreement, arise from, and/or are "reasonably related" to the Work for Hire Agreement.
DePaulo contends that "this case arises from a separate settlement agreement that is distinct from the Work for Hire Agreement and resolved disputes wholly unrelated to the Work for Hire Agreement." DePaulo Memo. of Law at 6. In this regard, DePaulo argues that "this action arises from a separate settlement agreement that largely concerned Defendant's intended use of intellectual property belonging to Plaintiff—intellectual property that predated the book collaboration by more than a decade." DePaulo Memo. of Law at 1. Thus, she asserts that the parties did not agree to arbitrate the breach of contract claim in her complaint. In response, Pirro maintains that "[t]he reasonable relationship' between this dispute and the Agreement (with its broad, unambiguous arbitration clause) is manifest," Pirro Reply Memo. of Law at 1, and that "DePaulo's effort to restyle her claim into one involving the purchase of a limited license' is nothing more than a transparent subterfuge to evade the Agreement's governing arbitration clause." Pirro Reply Memo. of Law at 2.
Discussion
The crux of the parties' dispute as set forth in the complaint is whether they entered into a settlement agreement evidenced by the August 12, 2015 email. If they did, then, as plaintiff asserts, Pirro would be in breach for not having made the $28,750 payment required thereunder. However, as discussed below, these issues are not properly before this court. Pursuant to paragraph 15 of the Work for Hire Agreement, they belong in arbitration.
When a court must determine whether a dispute is covered by an arbitration clause, the court:
should merely determine whether there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the [agreement containing the arbitration clause]. If there is none, the issue, as a matter of law, is not arbitrable. If there is, the court should rule the matter arbitrable, and the arbitrator will then make a more exacting interpretation of the precise scope of the substantive provisions of the [agreement], and whether the subject matter of the dispute fits within them.
Bd. of Educ. v Watertown Educ. Assn., 93 NY2d 132 [1999]. DePaulo admits that this is the governing standard. DePaulo Memo. of Law at 7-8.
Although Watertown concerned an arbitration clause in a collective bargaining agreement involving public sector arbitration under the "Taylor Law," the reasonable relationship test was adopted with respect to private sector arbitration agreements by the Court of Appeals in Nationwide Gen. Ins. Co. v Invs. Ins. Co., 37 NY2d 91, 96 [1975] ("Once it appears that there is, or is not a reasonable relationship between the subject matter of the dispute and the general subject matter of the underlying contract, the court's inquiry is ended.").
Here, a reasonable relationship between the dispute and the Work for Hire Agreement exists because, inter alia: (1) the Complaint asserts that the $28,750 payment was designed in part "to release any claims arising from the termination of defendant's collaboration with plaintiff"; i.e., to resolve DePaulo's demand for the second $37,500 payment; and (2) Pirro has averred that she will counterclaim for a return of the $37,500 originally paid to the plaintiff under the Work for Hire Agreement if this action remains in court. See Complaint at ¶ 114; Pirro Reply Memo of Law at 4.
Furthermore, the court finds that the arbitration clause in the Work for Hire Agreement is broad. This is significant for reasons detailed further below.
"An arbitration clause that covers all disputes arising out of' or relating to' the underlying agreement is considered a broad' arbitration clause." State of NY v Philip Morris Inc., 30 AD3d 26, 31 [1st Dept 2006] ("The terms arising out of,' and most particularly relating to,' certainly evince a broad arbitration clause."); see also Wachtel v 205 N7 Holdings LLC, 43 Misc 3d 1233(A) [Sup Ct Kings Cty 2014]. While the instant arbitration clause does not contain identical language, its coverage of "any dispute or claim arising with respect to [the Work for Hire] Agreement" likewise evinces a broad arbitration clause. The Wachtel arbitration clause was nearly identical to the one in the present matter, and covered "any dispute, controversy, claim, or question arising with respect to this Agreement" and was determined to be a "broad" arbitration clause. Wachtel, 43 Misc 3d 1233(A) (emphasis added).
Although in Wachtel the court denied the motion to compel arbitration, that conclusion was based on the fact that the subsequent settlement agreement had nothing to do with the original agreement, which is not the case here. Wachtel, 43 Misc 3d 1233(A).
"Once the parties to a broad arbitration clause have made a valid choice of forum, as here, all questions with respect to the validity and effect of subsequent documents purporting to work a modification or termination of the substantive provisions of their original agreement are to be resolved by the arbitrator." Inryco, Inc. v Parsons & Whittemore Contractors Corp., 55 NY2d 666, 667 [1981] (quoting Schlaifer v Sedlow, 51 NY2d 181, 185 [1980]).
In Inryco, plaintiff subcontractor entered into five written contracts with defendant contractors for certain construction work (the "Original Contracts"). After a dispute arose concerning performance under the Original Contracts, the parties' attorneys attempted to resolve their differences. Subsequently, defendants argued that the parties reached a settlement agreement and sought to enforce it through arbitration, while the plaintiff maintained that such a settlement agreement was never reached.
In reversing the Appellate Division's finding that "the arbitration clause contained in the [Original Contracts] does not extend to disputes arising from a subsequent and separate settlement agreement," the Court of Appeals held that the arbitration clause did extend to such disputes because "the broad provisions encompass all disputes arising out of the contracts, including those relating to subsequent agreements concerning obligations under the original contract." Id. at 667. In the instant case, the purported August 12, 2015 settlement agreement could not be characterized as anything other than a "subsequent agreement concerning obligations under the original [Work for Hire] contract." Id.
Inryco, Inc. v Parsons & Whittemore Contractors Corp., 80 AD2d 509, 510 [1st Dept 1981], rev'd, 55 NY2d 666 [1981]. Notably, this finding by the Appellate Division, reversed by the Court of Appeals, is the very concept on which plaintiff relies to oppose defendant's motion to compel arbitration.
In this regard, it should be noted that the court has not yet made, nor will it make, a finding as to formation of the purported settlement agreement. DePaulo's position depends on the assumption that a separate settlement agreement exists in fact; but, this finding has not been made, and is one of the ultimate issues in dispute. Thus, the August 12 emails, at this juncture, are precisely the kind of "subsequent documents purporting to modify or terminate" obligations related to the Work for Hire Agreement contemplated by Inryco as being ripe for arbitration. For if DePaulo's argument is accepted, the August 12 settlement agreement would resolve claims she might otherwise have under the Work for Hire Agreement.
Even assuming arguendo that the August 12, 2015 emails constituted an enforceable agreement, this court believes the broad arbitration clause in the Work for Hire Agreement would still apply to the parties' dispute.
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DePaulo's reliance on Pursuit Inv. Mgt., LLC v Alpha Beta Capital Partners, L.P., 127 AD3d 565 [1st Dept 2015] for the proposition that her claims arise from a separate, subsequent agreement not requiring arbitration is misplaced. In Pursuit, the First Department denied arbitration primarily on the ground that, unlike the present matter, not all of the parties to Pursuit had agreed to arbitrate in any form or under any condition. Plaintiff's further reliance on Waldron v Goddess, 61 NY2d 181 [1984], is unavailing as the arbitration clauses in dispute therein were not broad arbitration clauses, were not agreed to by all parties to the dispute, and had previously expired. Acting Supt. of Schs. of Liverpool Cent. Sch. Dist. v United Liverpool Faculty Assn., 42 NY2d 509 [1977], cited for the contention that arbitration may not be mandated because the dispute does not "[fall] clearly and unequivocally within the class of claims agreed to be referred to arbitration" is also distinguishable, because Acting Supt. did not deal with a broad arbitration clause, like the one before this court.
DePaulo argues that the August 12, 2015 settlement "covered a wholly independent licensing agreement involving intellectual property generated by Plaintiff long before the Work for Hire agreement existed." DePaulo Memo of Law at ¶ 7. But this reasoning is belied by other sections of the complaint and the opposition papers. DePaulo admits that the settlement agreement was, in part, "to resolve any outstanding dispute over Plaintiff's improper termination." Complaint at ¶¶ 9, 112. The "improper termination" can only refer to paragraph 14 of the Work for Hire Agreement outlining four scenarios under which Pirro may properly terminate the Agreement. Thus, such termination—and the basis for DePaulo's Complaint—falls unequivocally within the terms of the Work for Hire Agreement, which is governed by an equally-unequivocal arbitration clause. In conclusion, because the underlying dispute is reasonably related to the Work for Hire Agreement, which contained a broad arbitration provision, all disputes concerning the validity and effect of purported subsequent agreements—including the dispute alleged in the Complaint—are to be resolved by the arbitrator.
Accordingly, it is hereby
ORDERED that the defendant's motion to compel arbitration is granted. This action will be held in abeyance until the parties complete arbitration. In the event, the arbitrator finds the August 12 settlement is in fact separate and not related to the Work For Hire Agreement, Ms. DePaulo may petition the court to calendar the dormant action. But if the arbitrator finds the two are intertwined, then he or she will fully resolve the dispute. Dated: February 24, 2016 ________________________ J.S.C.