Opinion
01 cv 9668 (HB
January 16, 2002
OPINION ORDER
Plaintiff International Top Sports S.A. ("ITS") moved for summary judgment and a Rule 54(b) certification in connection with Pan American Sports Network International's ("PSN's") alleged breach of its obligation to broadcast the 2000-2007 seasons of the South American Basketball League Tournament (the "Tournament") pursuant to a January 2000 contract (the "contract") between PSN, ITS and Confederacion Sudamericana de Basquetbol ("Consubasquet"). PSN is a U.S. corporation that broadcasts sporting events to Latin America and elsewhere. ITS, a Uruguayan corporation based in Argentina, is a sports marketing and advertising firm that in 1998 acquired the broadcasting and advertising rights to the Tournament, featuring the best basketball teams from 10 South American Countries, from Consubasquet, a non-profit Peruvian corporation that has organized the Tournament since 1996.
Under the April 7, 1998 contract between Consubasquet and ITS, ITS agreed to pay and arrange for all of the travel and hotel accommodations for the players, staff and other officials connected with the Tournament games and, in addition, to pay fees to Consubasquet pursuant to a payment schedule.
Specifically, ITS moves for: (1) summary judgment on its claim that PSN owes $625,000 under the contract for the concluded 2001 season (contract, Appendix 2, W. English translation); (2) certification of that judgment pursuant to Fed.R.Civ.Pro. 54; (3) a declaratory judgment that PSN is liable to ITS for contract damages for the 2002-2007 seasons; and (4) a declaratory judgment that ITS is unable to mitigate its damages for the 2002 season which is scheduled to begin February 20, 2002. In its reply brief, ITS withdrew its motion for summary judgment on its claim for specific performance of PSN's contractual obligation to broadcast the 2002 season and instead moved for a consolidated hearing on its motion for preliminary injunction and trial on the merits of its claim for specific performance. For the reasons discussed below, ITS' motion is denied in its entirety, and the Court will however, due to time constraints urged by the movant, hold a hearing on PSN's motion for a temporary mandatory injunction requiring PSN to broadcast the 2002 Tournament.
Rule 54(b) permits a district court to enter a separate final judgment on any claim or counterclaim after making "an express determination that there is no just reason for delay." Rule 54 certification is strongly disfavored and is inappropriate where the underlying factual bases of each claim are interrelated. See Cullen v. Margiotta, 618 F.2d 226, 228 (2d. Cir. 1980). ITS argues that certification is appropriate in this instance because the facts underlying the $625,000 are independent of its other claims and because "[t]he overdue contract payment is necessary for ITS and Consubasquet to cover expenses for the upcoming 2002 Tournament," (ITS br. at 15-16.), and cites to the affidavits of Horacio Murcatore, President of Consubasquet, and Guillermo Petti, President of ITS, who state in sum and substance that "it will not be possible for the 2002 Tournament to be played" unless PSN makes immediate payment of the outstanding $625,000. (Murcatore Aff, ¶¶ 15, 25; Petti Aff, ¶¶ 13-14.) Even if I agreed that the facts pertaining to the $625,000 payment could be carved out from the rest, I would be hard pressed to take this argument at face value since, as I understand it, the 1996-1999 Tournaments were not televised, at least not by PSN, and at a January 3, 2002 pre-trial conference the lawyers for Consubasquet and ITS stated that the Tournament would begin on February 20, 2002. Further, ITS has not provided the Court with evidence of the precariousness of ITS' and Consubasquet's financial conditions, apart from the conclusory statements of Muractore and Petti.
Discussion
1. Standard
In a motion for summary judgment, the burden is on the moving party to establish that there are no genuine issues of material fact in dispute and that it is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Fed.R.Civ.P. 56(c). A dispute regarding a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party."Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 523 (2d Cir.) (quotation omitted). The court resolves all ambiguities and draws all inferences in favor of the nonmoving party in order to determine how a reasonable jury would decide. Aldrich, 963 F.2d at 523.
2. Summary Judgment on Claim for $625,000
Pursuant to the contract, ITS assigned its broadcast rights to PSN andinter alia guaranteed that it would produce a television signal for a maximum of 20 games per season a television signal that achieves certain minimum production standards with respect to the quality of the image and sound, the number of cameras used, special image and sound effects, as well as other characteristics of first-class international signals. (Contract, 6.1.1, English translation). While ITS guaranteed certain production values, such as the foregoing, it more generally guaranteed to deliver a program comparable "to the characteristics of first class signals directed at the transmission and retransmission of international sports competitions." (Id.)
PSN broadcast the 2000 and 2001 seasons of the Tournament. of the US $2.5 million that PSN owed for the 2001 season, (Appendix 2 to the contract sets forth PSN's payment obligations as assignee of ITS' broadcasting rights), PSN paid all but the final payment of $625,000, due on April 30, 2001. ITS argues that it is entitled to the overdue payment. Were it that simple, ITS would be entitled to summary judgment. However, PSN has raised a factual issue as to whether ITS achieved a "first class signal," and upon furnishing a laundry list of alleged problems with ITS' performance during the 2001 season opines that the signal was "third-rate" at best. (See Affidavit of Timothy M. Coakley). ITS argues that while there may be a factual dispute as to the quality of its performance, its alleged shortcomings are not a bar to summary judgment since the contract included a notice-and-cure provision and PSN never provided ITS with written notice of its intent to terminate, or indeed alleged non-performance, prior to the commencement of this lawsuit. ITS insists that PSN terminated the contract for business reasons unrelated to ITS' performance and that PSN effectively conceded as much in correspondence with ITS. That argument, however powerful it may be, in turn engenders its own factual dispute. PSN denies that the termination was caused by other than by ITS' failing performance and states that it repeatedly notified ITS of its many breaches of the contract over the course of the 2000 and 2001 seasons and that such notice satisfied the notice and cure provision. In support ITS submitted various e-mails to that effect. Further, PSN argues that notice-and-cure provision is not exclusive on its face and was not intended by the parties to be so.
In case ITS or CONSUBASQUET should breach any of its obligations under this contract. At time such acts take place, PSN will notify ITS in writing of its intention to rescind so that, within a maximum term of twenty (20) business days, ITS may correct the cause of the same. On expiration of said term of twenty (20) business day without ITS having resolved the complaint of PSN, the contract will be lawfully rescinded, PSN being exempted from making any type of payment pending. The provisions of this clause do not limit the right of PSN to claim damages arising out of the cause for rescission." (Contract, 10.c, English translation.)
ITS submitted various letters which indeed support its version of events. (See ITS' Reply Declaration and attached exhibits).
At this essentially pre-discovery stage of the litigation I can neither credit nor discard PSN's factual arguments as to the adequacy of ITS' performance, the exclusivity of the notice-and-cure provision, or PSN's invocation thereof Therefore, I cannot grant summary judgment on the claim for $625,000, and must for the same reason deny ITS' motion for a Rule 54(b) certification.
3. Declaratory Judgment Claims
The result is the same for the two declaratory judgment claims. Since the facts necessary to determine (1) whether ITS substantially performed on the contract and (2) whether PSN duly terminated the contract as a result of ITS' failure to produce a first class signal are in dispute, summary judgment must be denied as to this claim. Moreover, that portion of this claim which requests a declaratory judgment that ITS is unable to mitigate damages for the 2002 season raises additional factual questions concerning mitigation that make this claim particularly ill-suited for summary judgment. Apparently, ITS is as we speak in negotiation with other networks to carry the 2002 Tournament. (See Petti Aff, ¶ 4) ("Other than PSN, the ESPN and Fox cable channels have the capability of making, and potential business interest in, such broadcasts.") Few of the details of those negotiations are before the Court, and I cannot determine whether this will happen at all and if it does, what it may mean.
In his affidavit, Guillermo Petti, President of ITS, stated that Fox has indicated an interest in broadcasting the 2002 Tournament, but only on a revenue sharing basis whereby ITS and Fox would share television production costs and split advertising revenue." (Petti Aff., ¶ 9). Petti states that such an arrangement "probably is not feasible" because of financial concerns, but does not provide the quality and quantity of evidence necessary for me to determine the feasibility of mitigation.