Opinion
601151/03.
Decided June 6, 2005.
Plaintiff Wilhelmina Artist Management, LLC (WAM) moves for summary judgment on its claims, and dismissing the counterclaims, CPLR 3212.
This is a contract dispute between a company, WAM, which represents artists in connection with various commercial marketing activities, and Beyonce Knowles, a well-known recording artist, performer and actress, and a member of the musical group Destiny's Child. WAM is seeking to recover commissions and service charges it claims it is entitled to under the parties' agreement with respect to Knowles' endorsement of certain products made by the cosmetics conglomerate, L'Oreal, USA, Inc. Knowles claims that WAM breached the covenant of good faith and its fiduciary duty by concealing L'Oreal's true financial offer to her in order to recover a service charge.
BACKGROUND
In May 2000, Knowles and WAM executed the first of two written contracts (the First Contract). In this First Contract, Knowles engaged WAM to be her sole representative in the field of "Commercial Marketing Activities," broadly defined as including, but not limited to, modeling, runway, fashion, commercials, spokesperson deals, tour sponsorships, endorsements, merchandising, and product placement. Exhibit 4 to Notice of Motion, ¶ 1. Knowles agreed to pay WAM a 10% commission, and agreed that WAM was entitled to receive a service charge or fee from some or all of the firms to whom it introduced Knowles, and that this was an additional inducement for WAM to act on her behalf. Id., ¶¶ 3, 6.
On November 20, 2000, counsel for Knowles sought to renegotiate the First Contract, asserting that Mathew Knowles, Knowles' father, who negotiated that contract, was allegedly unaware of the scope of the representation WAM sought in the First Contract. Counsel wanted to renegotiate the 20% service charge. Exhibit 6 to Notice of Motion. As a result, the parties engaged in negotiations with respect to the scope of the term "Commercial Marketing Activities," and the 20% fee. Affidavit of Dieter Esch, dated December 16, 2004, ¶ 14.
On May 7, 2001, Beyoncé and WAM executed a contract dated as of "March __, 2001 (the Second Contract), pursuant to which Knowles again engaged WAM as her "sole and exclusive representative" in the field of "Commercial Marketing Activities," defined as "modeling, runway, fashion, commercials, spokesperson deals, tour sponsorship celebrity endorsements, merchandising . . ., and product placements, and includes without limitation all licensing or other agreements with respect thereto." Exhibit 8 to Notice of Motion, ¶ 1.a. This time, however, the contract specifically excluded musical performances. Id., ¶ 1.c. It provided that it would terminate on May 18, 2002. Id., ¶ 6.
In paragraph 2 of the Second Contract, Knowles "appoint[ed] [WAM] as her lawful Attorney-in-Fact and authoriz[ed] [WAM] to collect and receive monies on [Knowles'] behalf," and to endorse her name and deposit the monies in WAM's bank account, and retain any monies due WAM. Id., ¶ 2. This paragraph also provided that WAM could not enter into any agreements on Knowles' or Destiny's Child's behalf. Id.
Knowles further agreed, in paragraph 4, to pay WAM a 10% commission "on all gross monies or other consideration . . . relating to [Knowles'] modeling and all other Commercial Marketing Activities," and from any "television commercials, industrials, usages and/or renewal fees" relating to activities that are the subject of the contract, during the term of the WAM contract. Id., ¶ 4.
In paragraph 9 of the WAM contract, Knowles agreed that WAM is and "will be entitled to receive a service charge or fee in the amount of twenty (20%) (but not more than 20%) of the overall payments made" for Knowles' or Destiny's Child's services from "some and/or all of the clients who utilize" their services. Id., ¶ 9. This service charge was to be "in addition to the commissions [WAM would] receive from [Knowles] under this Agreement" and WAM's "entitlement to such a service charge or fee, [was] an additional inducement for [WAM] to act on [Knowles'] behalf." Id.
This paragraph also reviewed WAM's duty of loyalty to Knowles. It provided that WAM "acknowledge[d] and agree[d] that in [WAM's] representation of [Knowles] hereunder, [WAM's] duty of loyalty shall be owed primarily to [Knowles or Destiny's Child] and not to clients who utilize [their] services." Id. WAM's receipt of a service charge from a third-party client was explicitly not in itself deemed to be a violation of its duty of loyalty, or any other duty it owed, to Knowles or Destiny's Child. Id.
During the term of the WAM contract, WAM negotiated with L'Oreal for a celebrity endorsement and tour sponsorship agreement on behalf of Knowles and Destiny's Child (the L'Oreal Contract). Knowles executed the written contract with McCann-Erikson USA, Inc., as agent for L'Oreal, pursuant to which she agreed to furnish her exclusive services as an on-camera spokesperson for L'Oreal for all "hair cosmetics and skincare products," subject to L'Oreal paying Knowles, through WAM, for the services and rights conveyed. Exhibit 9 to Notice of Motion, at 1. The term of the agreement commenced on April 15, 2001, with an initial two year term and three additional option terms of one year each (the First Option Term, the Second Option Term, and the Third Option Term). Id., ¶ 1.
In the Initial Term, L'Oreal agreed to pay Knowles $1.7 million, in installments specified in a schedule in the agreement. Each installment provision stated that L'Oreal would pay Knowles that amount "and an additional Twenty (20%) percent of that amount as commission payable to [WAM]." Id., ¶ 6 (a) (i)-(viii).
L'Oreal has paid the first six installments for the Initial Term, totaling $1,275,000. Knowles paid WAM its 10% commission. WAM also received the 20% service charge on these first five installments. Plaintiff's Statement of Undisputed Material Facts, ¶ 37. The last two payments due for the Initial Term were for $212,500 each, one payable six months after the beginning of the second year of the Initial Term, and the last payment of $212,5000 due six months thereafter. Exhibit 9 to Notice of Motion, ¶¶ 6 (a) (vi), (vii). L'Oreal has paid these final two payments for the Initial Term, but Knowles has not paid WAM its 10% commission. WAM has also not been paid the 20% service charge. Id., ¶ 36.
L'Oreal has exercised its option for a First Option Term, and has paid Knowles $915,000 due in connection therewith. Id., ¶ 38. L'Oreal has also exercised its option for a Second Option Term, and made the first two payments (totaling $750,000) of a total of three payments (totaling $1 million) due in connection with the Second Option Term. Id., ¶ 39. If L'Oreal exercises its option for a Third Option Term, it is obligated to pay Knowles a total of $1,080,000 in three scheduled installments. Id., ¶ 40.
It is undisputed that Knowles has not paid WAM its 10% commission of the final two payments (totaling $415,000) for the Initial Term, its 10% commission of the $915,000 paid by L'Oreal in connection with the First Option Term, and its 10% commission of the $750,000 paid by L'Oreal to date in connection with the Second Option Term. Id., ¶ 41.
It also undisputed that L'Oreal has not paid WAM the 20% service charge WAM claims is due under the contract. Based on Knowles' competing claim to the 20% service fees. L'Oreal interpleaded Knowles into WAM's separate action against L'Oreal, entitled Wilhelmina Artist Management, LLC v. L'Oreal, USA, Inc. (Index No. 119110/03 [Sup Ct, NY County]), and obtained an interpleader order pursuant to CPLR 1006 (f). Id., ¶ 47; see Affidavit of Dieter Esch, dated December 16, 2004, ¶ 26, and Exhibit 3 to Notice of Motion. Pursuant to that interpleader order, L'Oreal has paid $334,436.11 (plus interest accrued and accruing thereon) into court. Plaintiff's Statement of Undisputed Material Facts, ¶ 48.
In 2002, Elizabeth Arden had been asked to consider marketing a perfume endorsed by Destiny's Child, but an agreement was not reached. Id., ¶ 56. In January 2004, Knowles contracted with Tommy Hilfiger USA, Inc. to endorse a Hilfiger perfume, by contract which contains an exclusivity provision, preventing Knowles from endorsing any other "Fragranced Product." Id., ¶ 55; see Exhibit 13 to Notice of Motion.
WAM brought this action seeking recovery of commissions, and a declaration with regard to its right to the 20% service charges from the L'Oreal Contract. The complaint asserts three causes of action. The first is for breach of contract, seeking $184,000 (the 10% commissions on the monies L'Oreal has already paid), and the Interpleader Funds (the 20% service charges also on the monies L'Oreal has already paid). Exhibit 1 to Notice of Motion, ¶¶ 30-35. The second cause of action seeks a judgment declaring that Knowles statements that she would not pay the 10% commission on the balance of the monies to be paid by L'Oreal in the event L'Oreal exercises its option for the Second and Third Option Terms, and that she was entitled to the Interpleader Funds, constitute an anticipatory repudiation by Knowles of the WAM Contract, and that WAM is entitled to those funds. Id., ¶¶ 37-41. Finally, the third cause of action alleges that, because of Knowles wrongful actions, she will be unjustly enriched. Id., ¶ 43.
In her answer, Knowles denies most of the material allegations of the complaint, except admits that she has not paid the 10% commission on the monies paid by L'Oreal. Exhibit 23 to Notice of Motion, Answer ¶¶ 1-44. She asserts three counterclaims. The first alleges that WAM breached the covenant of good faith and fair dealing by concealing the true financial offer made by L'Oreal. She alleges that WAM represented the offer as being 80% of what L'Oreal was actually willing to pay for Knowles to endorse L'Oreal's products rather than the full amount of the offer, so that it could receive the 20% service charge. Id., ¶¶ 57-64, 71-75.
The second counterclaim for breach of fiduciary duty alleges that, pursuant to paragraph 2 of the WAM Contract, WAM owed Knowles a fiduciary duty. It further alleges that WAM breached this duty by concealing L'Oreal's true offer, and, after the WAM Contract was terminated by its terms, by misrepresenting to Elizabeth Arden that it still represented Knowles. Id., ¶¶ 77-81.
The third counterclaim alleges that, by retaining the 20% service charge as to L'Oreal, WAM has been unjustly enriched. Id., ¶¶ 83-86.
In this motion, WAM contends that it is entitled to summary judgment on its claims because the agreement clearly and unambiguously gives it the right to receive the 10% commissions and the 20% service charges. It relies on paragraph 4 of the WAM Contract as setting forth Knowles' obligation to pay the 10% commissions, and on Knowles' admissions in her answer that she has failed to pay such commissions as proof that summary judgment on the claim is appropriate. WAM points to the language in paragraph 9 of the WAM Contract, as well as paragraph 6 of the L'Oreal Contract, as clearly providing for its entitlement to a service fee equal to "an additional Twenty (20%)" of the amounts paid by L'Oreal to Knowles. Dieter Esch, WAM's president and CEO, attests that, in negotiating the First and Second Contracts, he specifically informed Knowles, through her father who was representing her, that WAM always receives a 20% service charge from third parties, and that these fees are commonly charged by agencies such as WAM in their representation of celebrities. Esch Aff., ¶ 14. While Knowles was proposing that WAM receive no additional commission, she ultimately agreed to the 20% service charge, and paragraph 9 remained in the Second Contract. See Exhibit 5 to Notice of Motion, Deposition of Mathew Knowles, dated December 11, 2003, at 42-45. Based on these provisions of the Second Contract, WAM urges that it is entitled to summary judgment with respect to its claims for its 20% service fee on the L'Oreal Contract.
WAM urges that the counterclaims should be dismissed. It argues that they are based on the false allegations that WAM concealed L'Oreal's actual financial offer, and that L'Oreal never pays an agency a service fee or additional commission. WAM asserts that it is undisputed that L'Oreal did not reject its demand for a 20% service fee. It points to the numerous places in the L'Oreal Contract specifically acknowledging the 20% fee. Exhibit 9 to Notice of Motion, ¶ 6. WAM also submits a letter, dated January 30, 2001, from McCann-Erikson, L'Oreal's agent, informing Esch of the principal points of L'Oreal's firm offer. This letter states that L'Oreal would guarantee $1.7 million to Knowles, plus a $300,000 commission to WAM. Exhibit 10 to Notice of Motion, at 2. WAM, through Esch, rejected that offer, and after further negotiation, L'Oreal agreed to pay Knowles $1.7 million, and pay WAM a 20% fee on any compensation made to Knowles and Destiny's Child, i.e. to pay WAM $340,000.00. See Affidavit of Dieter Esch, dated December 16, 2004, ¶ 28 n. 3; Exhibits 9 and 11 to Notice of Motion. WAM also submits a February 2, 2001 letter, from McCann-Erikson, which states that "[w]hile I did not make any reference in the [L'Oreal Contract] to your verbal agreement with Joe Campinell [President of L'Oreal's Consumer Products Division] regarding [WAM's] fee for Year One, I wanted to remind you that your traditional fee of 20% cannot be part of this deal and that you will bill $40,000 of that fee to Joe separately." Exhibit 11 to Notice of Motion. WAM explains that its traditional fee of 20% of the $1.7 million would have been $340,000, and because L'Oreal wanted to do the deal for $2 million, Campinell agreed to pay the $40,000 by being separately invoiced by WAM for that amount. Esch Aff., ¶ 28 n. 3; see Exhibit 11 to Notice of Motion.
With regard to Knowles' allegation that L'Oreal never pays a 20% service fee to agencies for celebrity endorsement deals like Knowles', WAM submits the deposition testimony of Campinell in which he states, after reviewing 29 L'Oreal contracts with models and celebrity spokespersons, that L'Oreal does pay a service fee to agents, ranging from 0 to 20%. Exhibit 12 to Notice of Motion, Deposition of Joseph Campinell, dated 5/20/04, at 85-86, 89-90. Thus, WAM contends that there is no factual basis for Knowles' allegation that L'Oreal never pays a 20% service fee to agencies for similar deals.
With respect to the breach of fiduciary duty counterclaim, WAM urges that it had no fiduciary duty, and that this was an ordinary, arm's length business transaction. WAM also challenges Knowles' allegation that its actions caused her to lose a potential fragrance endorsing deal with Elizabeth Arden. It contends that Knowles' has failed to produce any evidence that Elizabeth Arden ever made any offer or proposal to her. WAM submits an affidavit from Jon Feeney, who was the Marketing Director for Elizabeth Arden in 2002, who asserts that while he made a draft proposal for a Destiny's Child fragrance, that proposal was never released to any representatives of Destiny's Child, and Arden never prepared a formal licensing agreement for Destiny's Child. WAM further argues that Knowles has entered into a fragrance deal with Tommy Hilfiger USA, Inc. which prohibits her from endorsing any other fragranced product.
In opposition, Knowles contends that there are a number of disputed facts material to the claims, counterclaims and defenses, warranting denial of the motion. Knowles asserts that WAM, while negotiating with L'Oreal, unlawfully recalculated L'Oreal's financial offer to Knowles, taking for itself 20% of the funds that L'Oreal had offered to her. Knowles submits Mathew Knowles' deposition testimony, who attests that in negotiating the Second Contract, Esch represented to him that the negotiations would be conducted in two parts, first, WAM would negotiate the best deal for the artist, then, it would go back to the third-party client to negotiate WAM's fee separately. Exhibit 8 to Defendant's Rule 19-a Statement, Mathew Knowles Dec 11 Dep., at 135-39, 200. Knowles claims that did not occur with the L'Oreal Contract negotiations.
Knowles points to testimony from L'Oreal and McCann-Erikson that L'Oreal wanted to do the deal for a total of $2 million. See Exhibit 5 to Defendant's 19-a Statement, Deposition of Danielle Korn, dated December 8, 2004, at 130-131; Exhibit 11 to Defendant's 19-a Statement, Deposition of Joseph Campinell, dated September 10, 2003, at 18-20, 81, 90. Esch corroborated that testimony, by stating that Campinell said that L'Oreal would pay a certain amount, and that it was up to WAM and Knowles to split it up. Exhibit 1 to Defendant's 19-a Statement, Deposition of Dieter Esch, dated July 23, 2003, at 46; Exhibit 11 at 85-86, 90. Knowles further points to Esch's testimony that he told her that the deal was for $1.7 million, plus a 20% service fee for WAM, and not for $2 million. Id., Exhibit 4, Esch Dep. at 99-100. Thus, she argues that WAM admits that it concealed L'Oreal's "true" offer of $2 million.
Knowles also contends that L'Oreal had never paid a 20% service charge on a celebrity endorsement or tour sponsorship, as opposed to a modeling contract, negotiated with WAM. Knowles asserts that Campinell's testimony was based on L'Oreal contracts which were predominantly modeling contracts rather than celebrity endorsement contracts, negotiated by Wilhelmina Models, not WAM, and that the two celebrity contracts do not contain any mention of a 20% service fee. Exhibit 6 to Defendant's Rule 19-a Statement, at 17, 37-39, 67-68; and Exhibits 9 and 10.
Knowles further asserts that WAM engaged in other misconduct, such as turning down other potential endorsement deals for her because third-party clients refused to pay the 20% service fee. Exhibit 8 to Defendant's Rule 19-a Statement, Mathew Knowles Dep. at 100-01, 104-05, 182-83; see Defendant's Memorandum in Opposition, at 9 n5. She claims that WAM made statements, after the termination of the WAM Contract, to Elizabeth Arden, attempting to broker a deal on Knowles' behalf, despite the fact that it had no authority to do so. Defendant's 19-a Statement, Exhibit 8, Knowles Dep. at 176-77; see also id., Exhibit 1, Esch Dep. at 103-06, and Exhibits 14, 15 and 16. When Knowles later learned of WAM's actions, she contacted Elizabeth Arden to discuss a potential deal, and Elizabeth Arden told her it was no longer interested. Id. Exhibit 8 at 176-77. Based on this proof, Knowles asserts that a trial is warranted.
DISCUSSION
WAM's motion for summary judgment on its claims is granted, and the counterclaims are dismissed.
WAM is entitled to judgment on its complaint based on the clear and unambiguous language in both the Second Contract and the L'Oreal Contract. Construction of an unambiguous contract is a matter of law, appropriate for disposition by the court on summary judgment. See W.W.W. Assocs. v. Giancontieri, 77 NY2d 157, 162 (1990); Aviation Dev. Co. PLC v. C S Acquisition Corp., 1999 WL 46630, * 6 (SD NY), affd 201 F3d 430 (2d Cir 1999). "When the terms of a contract are clear and unambiguous, the intent of the parties must be found within the four corners of the document, and the court must enforce it without recourse to parol evidence." ABS Partnership v. AirTran Airways, Inc., 1 AD3d 24, 29 (1st Dept 2003) (citations omitted). The agreement should be read as a whole to determine its purpose and intent, and it should be construed to give effect and meaning to all provisions. W.W.W. Assocs. v. Giancontieri, supra; see also American Express Bank Ltd. v. Uniroyal, Inc., 164 AD2d 275, 277 (1st Dept 1990), appeal denied 77 NY2d 807 (1991). Clear language does not become ambiguous just because the parties argue differing interpretations. See Bethlehem Steel Co. v. Turner Const. Co., 2 NY2d 456, 460 (1957); Moore v. Kopel, 237 AD2d 124 (1st Dept 1997). The court must interpret the contract, giving effect to the parties' expressed intentions in entering into the agreement, and adopting an interpretation which gives effect to all of its provisions. ABS Partnership v. AirTran Airways, Inc., supra at 28; see also PNC Capital Recovery v. Mechanical Parking Sys., Inc., 283 AD2d 268 (1st Dept), lv dismissed 96 NY2d 937 (2001), appeal dismissed 98 NY2d 763 (2002).
Both the Second Contract, and the L'Oreal Contract, are clear and unambiguous, and may be interpreted as a matter of law. These agreements entitle WAM to both its 10% commission from Knowles and the 20% service charge from the other party to the contract. Paragraph 4 of the Second Contract clearly obligates Knowles to pay WAM a commission of 10% of all amounts paid and to be paid to her for Commercial Marketing Activities, such as those she performed under the L'Oreal Contract. Exhibit 8 to Notice of Motion, ¶ 4. Knowles does not dispute that she is obligated to pay the commission, and, in fact, paid it on a number of installments for the Initial Term. WAM is entitled to 10% of the $415,000 paid for the Initial Term, 10% of the $915,000 for the First Option Term, and 10% of the $750,000 paid for the Second Option Term, for a total of $184,000, plus interest, sought in the First Cause of Action. WAM also is entitled to a declaration, based on the clear contractual language, that Knowles is obligated to pay it the 10% commission for any additional amounts paid for the Second Option Term, and, if L'Oreal exercises its option for the Third Option Term, for amounts paid for the Third Option Term.
With regard to the claim for the 20% service charge on the L'Oreal Contract, the court finds that the Second Contract unambiguously provides that WAM is entitled to receive from L'Oreal the 20% service charge on the amounts paid by L'Oreal to Knowles under the L'Oreal Contract. Paragraph 9 of the Second Contract unequivocally states that WAM "[is] or will be entitled to receive a service charge or fee in the amount of twenty percent (20%) (but not more than 20%) of the overall payments made for [Knowles'] and/or [Destiny's Child's] services, from some or all of the clients who utilize [Knowles'] or [Destiny's Child's] services, in addition to the commissions you will receive from [Knowles]." Exhibit 8, ¶ 9. Knowles' argument that this language is ambiguous because it only establishes that WAM can receive such a fee, and does not give it an automatic entitlement to the fee, is rejected. See Reiss v. Financial Performance Corp., 97 NY2d 195 (2001). Paragraph 9 clearly entitles WAM to seek out the fee from the client in addition to the 10% commission it receives from Knowles. No ambiguity exists on this point.
Knowles' attempt to introduce parol evidence to argue that the provision meant that WAM had to conduct a two-step negotiation process, is rejected. An omission in a contract does not constitute an ambiguity. Rather, the issue of whether an ambiguity exists must be ascertained from the face of the agreement without regard to extrinsic evidence. See id. at 199. There is nothing in paragraph 9, or anywhere else in the Second Contract, to suggest that WAM was obligated to engage in a such a two-step process. Even where a contingency may have been omitted in a contract, a court will not necessarily imply a term since "'courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing.'" Id., quoting Schmidt v. Magnetic Head Corp., 97 AD2d 151, 157 (2nd Dept 1983), and Morlee Sales Corp. v. Manufacturers Trust Co., 9 NY2d 16, 19 (1961). While the court notes that a two-step process, in truth, would have been fairer, Knowles was represented by her father, as well as by knowledgeable counsel, both of whom raised the issue of WAM's entitlement to this service charge in negotiating the Second Contract. Notwithstanding these discussions, the parties did not include a provision requiring a two-step negotiation before WAM would be entitled to the service charge, and the court will not imply such a provision. See id. It is important to note that Beyoncé, again, represented by counsel, signed the L'Oreal Contract, which contract contained numerous, unambiguous references to L'Oreal's obligation to pay WAM an additional service charge of 20% of all payments made to Knowles. Exhibit 9 to Notice of Motion, ¶¶ 6 (a)-(f). Knowles' belated claim that if paragraph 9 were found unambiguous, there would be a factual issue as to whether the inclusion of this provision in the contract was induced by fraud, is denied as no such claim has been pleaded, and she has failed to demonstrate any such fraud.
The defenses and counterclaims for breach of the covenant of good faith, breach of fiduciary duty, and unjust enrichment are dismissed
Knowles' counterclaim for breach of the duty of good faith and fair dealing is based on her allegation that WAM concealed the actual financial offer made by L'Oreal to her, and that L'Oreal never pays an agency like WAM a service charge or additional commission. The courts recognize, in appropriate circumstances, that an obligation of good faith and fair dealing on the part of a party to a contract may be implied and enforced. Sabetay v. Sterling Drug, Inc., 69 NY2d 329 (1987). This "'implied obligation is in aid and furtherance of other terms of the agreement of the parties.'" Id. at 335, quoting Murphy v. American Home Prods. Corp., 58 NY2d 293, 304-05 (1983). Therefore, no obligation can be implied which would be inconsistent with other terms of the parties' agreement. Id.; see also SNS Bank, N.V. v. Citibank, N.A., 7 AD3d 352 (1st Dept 2004).
The first contention, that WAM concealed the actual offer, is contradicted by the documentary evidence, including letters from McCann-Erikson, on L'Oreal's behalf (exhibits 10 and 11 to Notice of Motion), stating that L'Oreal was offering $1.7 million to Knowles, as well as the testimony by Campinell and Korn, that WAM's service fee would be paid, but that the deal needed to be done for $2 million in total. Beyoncé's speculation that this meant that L'Oreal was actually offering Knowles $2 million is not borne out by the record, and does not raise a factual issue, particularly in light of the fact that she agreed in the Second Contract that WAM could receive such a service fee. Moreover, the Second Contract went even further by explicitly acknowledging that WAM would not be breaching any duty of loyalty in seeking such a fee. Exhibit 8 to Notice of Motion, ¶ 9. Hence, it would be contrary to the explicit terms of the parties' contract to infer an obligation on WAM's part not to seek such a fee in negotiations with third-parties. See SNS Bank, N.V. v. Citibank, N.A., 7 AD3d at 355.
The second contention, that L'Oreal never paid such service fees, is negated by the fact that L'Oreal clearly did agree to pay, and did not reject WAM's request for such a fee in this case, as evidenced in the L'Oreal Contract signed by Knowles. It is also negated by Campinell's testimony, upon reviewing a number of L'Oreal contracts, that L'Oreal has paid a service fee to agents, ranging anywhere from zero to 20%, testimony relied upon by Knowles in asserting this contention. Exhibit 12 to Notice of Motion. Again, as determined above, the Second Contract unambiguously entitled WAM to receive such a fee, a provision that was negotiated by the parties and their counsel. Accordingly, these contentions fail to raise a factual issue as to WAM's duty of good faith.
Knowles counterclaim and defense of breach of fiduciary duty similarly fails to raise a triable issue. To establish a claim for breach of fiduciary duty, a party must show a fiduciary relationship, and a breach of the fiduciary duty. See SNS Bank, N.V. v. Citibank, N.A., 7 AD3d at 354. Absent extraordinary circumstances, conventional business relationships, that are the result of arms-length transactions, do not create a relationship of confidence or trust sufficient to find the existence of a fiduciary duty. In re Mid-Island Hosp., Inc., 276 F3d 123, 130 (2d Cir), cert denied 537 US 882 (2002); see also Oursler v. Women's Interart Ctr., Inc., 170 AD2d 407 (1st Dept 1991); Pan Am Corp. v. Delta Air Lines, Inc., 175 BR 438, 511 (SD NY 1994). Further, a fiduciary relationship generally will not be implied between parties to a commercial transaction where the parties are each represented by counsel and other professional advisors retained to protect their interests. See Pan Am Corp. v. Delta Air Lines, Inc., supra at 511.
Extraordinary circumstances are not present here. Knowles engaged WAM to represent her with respect to obtaining modeling, endorsement, and other Commercial Marketing Activities for a commission. This is an ordinary business relationship, and does not involve any specific relationship of confidence. See Dove v. L'Agence, Inc., 250 AD2d 435 (1st Dept 1998); see also Surge Licensing, Inc. v. Copyright Promotions Ltd., 258 AD2d 257 (1st Dept 1999) (arm's length, conventional licensing agreement, no fiduciary duty created, even where agreement used terms "principal" and "agent"). Knowles was represented by knowledgeable counsel and by her manager, Mathew Knowles. See Pan Am Corp. v. Delta Air Lines, Inc., supra at 511.
In Dove v. L'Agence, Inc. ( supra), a case factually similar to the instant one, the defendant modeling agency agreed to solicit modeling jobs for the plaintiff for a commission. The court held that there was no fiduciary relationship, and, therefore, there could be no breach of fiduciary duty. Id. Similarly, here, WAM was simply representing Knowles in obtaining modeling and endorsement activities for a commission. The Second Contract did not make WAM Knowles manager. In fact, it provided that WAM would work with Knowles appointed manager Mathew Knowles. Exhibit 8 to Notice of Motion, ¶ 1 (e). The Second Contract also specifically provided, in paragraph 2, that WAM had no power to enter into any agreements on Knowles behalf. Id., ¶ 2. Paragraph 9 explicitly provided that WAM's receipt of the 20% service charge "is not, and shall not be deemed to be, a violation of [WAM's] duty of loyalty to [Knowles] . . . or of any other obligation or duty" WAM owed to Knowles. Id., ¶ 9. These provisions, read together, make it clear that this was an ordinary commercial contract, and did not create any special fiduciary obligation.
To the extent that Knowles granted WAM a limited power of attorney with respect to the collection of funds from those she contracted with, that provision is not in issue here. Moreover, even where a party has been granted a power of attorney, unless it can be shown that the recipient of the power was to exercise it solely in the interest of the grantor, no fiduciary relationship arises. See 330 Acquisition Co., LLC v. Regency Sav. Bank, F.S.B., 306 AD2d 154 (1st Dept 2003) (even though bank designated in agreement with another bank as attorney in fact, no fiduciary relationship was created because bank was acting in its own interest as well as that of grantor); cf. Semmler v. Naples, 166 AD2d 751 (3rd Dept 1990), appeal dismissed 77 NY2d 936 (1991). Here, if WAM had collected funds, it would have been exercising the power of attorney in its owns interest as well as that of Knowles. Therefore, no extraordinary circumstances are present, and no relationship has been created by the Second Contract's provisions, from which would spring a duty independent of the contractual obligation. See Dove v. L'Agence, Inc., supra; Savage Records Group, N.V. v. Jones, 247 AD2d 274 (1st Dept), lv denied 92 NY2d 804 (1998). The cases relied upon by Knowles, involving the relationship of vendors and brokers of real property, or consignment relationships, are distinguishable from the relationship here. Knowles' assertions in her counterclaim that WAM lost potential endorsement deals with other companies all go to whether there was a breach of fiduciary duty, and since the court finds no such duty, the assertions are irrelevant. Accordingly, summary judgment dismissal of this counterclaim is appropriate.
Finally, both the complaint's third cause of action and the answer's third counterclaim, both seeking damages for unjust enrichment, are dismissed for the same reason. Where, as here, there is a valid contract governing the subject matter of the parties' dispute, recovery in quasi contract, for unjust enrichment, for events arising out of that same subject matter is precluded. See Apfel v. Prudential-Bache Secs., 81 NY2d 470, 478-79 (1993); Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 NY2d 382, 388 (1987); Surge Licensing, Inc. v. Copyright Promotions Ltd., 258 AD2d at 258. Therefore, the third cause of action and the third counterclaim are dismissed.
Accordingly, it is
ORDERED that the motion is granted on the first and second causes of action and the Clerk of the Court is directed to enter judgment in favor of plaintiff and against defendant in the amount of $184,000, plus the total amount of the Impleaded Funds in the action entitled Wilhelmina Artist Management, LLC v. L'Oreal, USA, Inc., Index No. 119110/03 (Sup Ct, NY County), i.e. $334,436.11, together with interest accrued and accruing thereon as prayed for allowable by law, until the date of entry of judgment, as calculated by the Clerk, and thereafter at the statutory rate, together with costs and disbursements to be taxed by the Clerk upon submission of an appropriate bill of costs; and it is further
ORDERED and DECLARED that pursuant to defendant's contract with plaintiff, defendant is obligated to pay plaintiff the 10% commission due with respect to further payments made by L'Oreal, USA, Inc. in connection with L'Oreal's exercise of the remainder of the Second Option Term, and the Third Option Term under the L'Oreal Contract with defendant, and that plaintiff is entitled to the 20% service charge in connection with those future payments; and it is further
ORDERED that the third cause of action in the complaint and the counterclaims in the answer are dismissed.