SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK: IAS PART 3
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FENRIS WOLF LTD.,

                                 Index No. 601206/99

Plaintiff,
- against -

GT INTERACTIVE SOFTWARE CORP.,

Defendant.
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BARRY A. COZIER, J.:
Defendant, GT Interactive Software Corp. ("GT"), moves, pursuant to CPLR 3211(a)(7), for an order dismissing each of the causes of action asserted against it by plaintiff, Fenris Wolf Ltd. ("Fenris").
The complaint seeks to recover money damages on theories of breach of contract; breach of implied obligation of good faith and fair dealing; and tortious and intentional interference with contractual relations.

This action arises out of defendant's alleged repudiation and breach of an agreement entered into on June 26, 1996 (the "Agreement"), whereby defendant was granted certain rights relating to two software video games based upon a fictitious war between lunar rebels and the earth governments that were to be developed by the plaintiff, entitled "Rebel Moon Rising" ("RMR") and "Rebel Moon Revolution" ("RM Rev"). Fenris is a developer of PC and console-based electronic games. GT is a developer, publisher, manufacturer and distributor of entertainment software products. Fenris alleges that RMR was to be a sequel to its first game, "Rebel Moon," and that at the time plaintiff entered into the Agreement with defendant, Fenris already had an existing agreement with Creative Labs to bundle1 Rebel Moon with Creative Labs' "3d Blaster" software.
Pursuant to the Agreement, defendant was granted the right to exploit the games commercially by various means, including entering into OEM ("Other Equipment Manufacturer") bundle arrangements for distribution of the games. Plaintiff had entered into an OEM bundling deal with Intel for distribution and marketing of RMR prior to entering into the Agreement with defendant. Indeed, RMR had been designed for use on Intel products by incorporating the Intel MMX processing chip, which was scheduled to be released by Intel in the fall of 1996. This arrangement enabled Intel to promote its technology by having products designed with Intel processing chips readily accessible on the market, and, at the same time, plaintiff was guaranteed marketing and channels of distribution for its game, thus promoting its game and building consumer brand recognition. Defendant, which had no involvement in the underlying arrangement with Intel, received a 40% royalty payment. According to plaintiff, the Intel bundling arrangement yielded plaintiff royalty revenues of $1,665,361; defendant received $550,348.
There was an unexpected delay by Intel in releasing its MMX processing chip, resulting in revised scheduling, to which defendant consented. Plaintiff completed and delivered RMR to defendant, which accepted and paid for it, and began distribution of RMR for retail sale. Plaintiff alleges that defendant wrongfully and unreasonably delayed and withheld consent to bundling arrangements which plaintiff had entered into with various computer manufacturers, subject to defendant's consent, which was required pursuant to the Agreement. Plaintiff alleges that this constituted a breach of contract and of the implied covenant of good faith and fair dealing, and damaged plaintiff in the sum of $775,000 in lost royalty revenues.
Plaintiff further alleges that it developed a second game, RM Rev, which was delivered to, and accepted by, defendant, which paid plaintiff $800,000, albeit tardily. On October 15, 1998, plaintiff delivered Milestone 9 of RM Rev to defendant, a five-level demo which included much of the same features previously submitted to, and accepted by, defendant. Plaintiff allegedly learned through defendant's game producer assigned to plaintiff's game development that, by November 4, 1998, defendant canceled the Agreement. Upon receiving verbal notice of cancellation, plaintiff requested that defendant provide written notice of cancellation, as required by Section III(B)(4)(a) of the Agreement. Defendant never issued written notice of cancellation.
Section III(B)(4)(a) of the Agreement contains a "Turnaround" provision which grants plaintiff the exclusive right, for a 180-day period after receipt of notice by defendant that it is canceling the development of RM Rev, to secure a bona fide agreement with another third-party distributor, manufacturer or publisher. Plaintiff claims that the failure and refusal of GT to notify plaintiff in writing that it was canceling the Agreement harmed plaintiff's ability to secure an agreement with a third-party.
Fenris also alleges that GT wrongfully failed to notify plaintiff that it was rejecting RM Rev within twenty days after its delivery, as required by the Agreement, and then, adding insult to injury, issued a false, inaccurate and belated claim that Milestone 9 was being rejected, and that plaintiff was in breach of the Agreement.
On December 3, 1998, defendant sent plaintiff a written 30-day notice to cure alleged deficiencies in Milestone 9. Although plaintiff disputes that there were deficiencies, it attempted to meet defendant's criticisms, but GT allegedly did not cooperate. No matter what plaintiff did to attempt to "cure" Milestone 9, defendant rejected its submissions. During this time, plaintiff also was attempting to secure a contract with GT Value Products, a division of defendant.

Dismissal Standard
On a motion to dismiss a complaint for failure to state a cause of action, the complaint must be liberally construed in the light most favorable to the plaintiff. Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275 (1977). The court must accept each and every allegation, and reasonable inferences therefrom as true, and, if plaintiff is entitled to recovery based upon any reasonable view of the stated facts, the complaint as a pleading is legally sufficient. 219 Broadway Corp. v. Alexander's, Inc., 46 N.Y.2d 506, 509 (1979) (citations omitted); McGill v. Parker, 179 A.D.2d 98, 105 (1st Dept. 1992) (citations omitted). The court's inquiry is limited to ascertaining whether the pleading states any cause of action, not whether there is evidentiary support for the complaint. Guggenheimer, supra. Since the court has not elected to treat this as a motion for summary judgment, the affidavits submitted by plaintiffs will be considered for the limited purpose of remedying any defects in the complaint in order to establish that plaintiffs have a cause of action. Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 635-636 (1976).


Breach of Contract
The essential elements to pleading a cause of action for breach of contract are as follows: "(1) the making of an agreement; (2) due performance by plaintiff; (3) breach thereof by defendant; and (4) causing damage to the plaintiff." Stratton Group, Ltd. v. Sprayregen, 458 F. Supp. 1216, 1217 (S.D.N.Y. 1979); see also, Furia v. Furia, 116 A.D.2d 694, 695 (2d Dept. 1986). The complaint must set forth (i) the provisions of the contract (Shields v. School of Law of Hofstra University, 77 A.D.2d 867, 868 (2d Dept. 1980); Lupinski v. Village of Ilion, 59 A.D.2d 1050 (4th Dept. 1977)); (ii) identify whether the agreement was written or oral (Bomser v. Moyle, 89 A.D.2d 202 (1st Dept. 1982)); and (iii) the rate of compensation. Caniglia v. Chicago Tribune-New York News Syndicate, Inc., 204 A.D.2d 233 (1st Dept. 1994); Cooper Sq. Realty, Inc. v. A.R.S. Mgt., Ltd., 181 A.D.2d 551 (1st Dept. 1992). The complaint must set forth the terms of the agreement upon which liability is predicated, either by express reference or by attaching a copy of the contract. Sebro Packaging Corp. v. S.T.S. Industries, Inc., 93 A.D.2d 785 (1st Dept. 1983); Chrysler Capital Corp. v. Hilltop Egg Farms, Inc., 129 A.D.2d 927 (3rd Dept. 1987).
The first cause of action set forth in the complaint alleges a breach of contract with respect to Milestone 9. Plaintiff alleges that it fully performed its obligations under the Agreement, but that defendant wrongfully failed to approve Milestone 9 and to pay plaintiff the $100,000 royalty owed pursuant to the contract.
Defendant argues that pursuant to the Agreement, the $100,000 royalty was not due until after approval of the Milestone by defendant, and, since there was no approval by defendant, there was no obligation by it to pay. Moreover, defendant argues, the complaint should be dismissed because plaintiff failed to comply with a contractual condition precedent to suit, to wit, the giving of written notice by plaintiff to defendant that the latter was in default and the passage of thirty days after receipt in which to cure. Kolvek v. Ferrucci, 245 A.D.2d 1078, 1079 (4th Dept. 1997).
However, `"[o]ne who unjustly prevents the performance or the happening of a condition of its own promissory duty thereby eliminates it as such a condition. He will not be permitted to take advantage of his own wrong, and to escape from liability for not rendering his promised performance by preventing the happening of the condition on which it was promised."' Ellenberg Morgan Corp. v. Hard Rock Cafe Associates, 116 A.D.2d 266, 271 (1st Dept. 1986) (citation omitted); see also, Kaplon-Belo Associates, Inc. v. Kim, 145 A.D.2d 413, 414 (2d Dept. 1988). Moreover, if, as plaintiff alleges, defendant wrongfully refused to acknowledge that plaintiff had cured the alleged deficiencies, then defendant would be in breach of the contract. Felix Contracting Corp. v. Oakridge Land & Property Corp., 106 A.D.2d 488 (2d Dept. 1984).
As a pleading, the first cause of action is legally sufficient. Accordingly, that branch of the motion seeking dismissal of the first cause of action for failure to state a cause of action is denied.
The second cause of action set forth in the complaint alleges that defendant's wrongful rejection of Milestone 9 constituted an unjustified repudiation of the Agreement, thereby entitling plaintiff to be paid for all remaining, undelivered RM Rev milestones, in the aggregate sum of $400,000. However, Section XIII(B) of the Agreement expressly provides as follows:
GT may terminate this agreement for any reason at any time. If termination is not due to a material breach by Fenris, Fenris shall be entitled to receive all sums due to it through the date of termination.
It has long been the law that a party has an absolute, unqualified right to terminate a contract on notice pursuant to an unconditional termination clause without court inquiry into whether the termination was activated by an ulterior motive. A.J. Temple Marble & Tile, Inc. v. Long Island Rail Road, 256 A.D.2d 526, 527 (2d Dept. 1998) (citations omitted); Big Apple Car, Inc. v. City of New York, 204 A.D.2d 109, 111 (1st Dept. 1994) (citations omitted). Since the Agreement limits defendant's potential liability to only those sums due through the date of termination, and there being no provision for acceleration of future milestone payments, the second cause cannot be maintained.
Accordingly, that branch of the motion seeking dismissal of the second cause of action for failure to state a cause of action is granted and it is dismissed.
Breach of Implied Obligation of Good Faith and Fair Dealing
The third cause of action alleges that GT unreasonably delayed or withheld consent for OEM bundling arrangements, contrary to its duties under the Agreement, and failed to enter into any bundling arrangements with computer manufacturers. Defendant argues that the Agreement does not impose an affirmative obligation on it to enter into OEM bundling arrangements with computer manufacturers, but merely sets forth a formula for paying royalties to plaintiff in the event that such arrangements were entered into.
There is implicit in all contracts an implied covenant of good faith and fair dealing. Murphy v. American Home Products Corp., 58 N.Y.2d 293, 304 (1983); Van Valkenburgh, Nooger & Neville, Inc. v. Hayden Publishing Co., Inc. 30 N.Y.2d 34, 45 (1972) cert. den., 409 U.S. 875 (1972). This covenant includes an implied undertaking on the part of each party that it will not intentionally and purposefully do anything to prevent the other party from carrying out the agreement on its part. Jaco Electronics, Inc. v. Hitachi America, Ltd., 207 A.D.2d 328 (2d Dept. 1994).
"It is well-settled that when interpreting a contract, the court should arrive at a construction which will give a fair meaning to all of the language employed by the parties to reach a practical interpretation of the parties so that their reasonable expectations will be realized." Joseph v. Creek & Pines, Ltd., 217 A.D.2d 534, 535 (2d Dept. 1995), lv to appeal dismissed 86 N.Y.2d 885 (1995), lv to appeal denied 89 N.Y.2d 804 (1996); see also, S & S Media, Inc. v. Vango Media, Inc., 84 A.D.2d 356, 360 (1st Dept. 1982).
Here, a fair reading of the contract implies a duty on the part of the defendant to assist, or, at least not to interfere with, plaintiff's entering into OEM bundling arrangements with computer manufacturers. Therefore, as a pleading, the third cause of action sets forth a cause of action for breach of implied covenant of good faith and fair dealing.
Accordingly, that branch of the motion seeking dismissal of the third cause of action for failure to state a cause of action is denied.
Tortious Interference with Contractual Relations
In order to plead a cause of action for tortious interference with contractual relations, a complaint must allege the following elements: (1) the existence of a valid contract between plaintiff and a third party; (2) defendant's knowledge of such contract; (3) defendant's intentional inducement of the third party to breach or otherwise render performance impossible; and (4) damages to plaintiff. Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 94 (1993) (citations omitted); Israel v. Wood Dolson Co., Inc., 1 N.Y.2d 116, 120 (1956). Plaintiff must show that defendant intentionally and through improper means induced the breach of a contract between plaintiff and a third party. Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 196 (1980); WFB Telecommunications, Inc. v. NYNEX Corp., 188 A.D.2d 257 (1st Dept. 1992) citing Guard-Life Corp., supra, lv denied 81 N.Y.2d 709 (1993). Plaintiff must offer proof of the use of unlawful means by defendant, or, if lawful means were used, the interference must have been the infliction of intentional harm done without excuse or justification. Slifer-Weickel, Inc. v. Meteor Skelly, Inc., 140 A.D.2d 320, 322 (2d Dept. 1988) (citations omitted).
A party to a contract cannot be held liable for tortious interference with respect to that contract. Key Bank of Northern New York, N.A. v. Lake Placid Co., 103 A.D.2d 19, 28 (3rd Dept. 1984) (citation omitted), appeal dismissed 64 N.Y.2d 644 (1984). Only a true stranger to a contract can be held liable for tortious interference with the contract. Burdett Radiology Consultants, P.C. v. Samaritan Hospital, 158 A.D.2d 132, 136 (3rd Dept. 1990). A parent corporation cannot be liable for tortious interference with the contractual relations of its subsidiary in order to protect its own interests. Foster v. Churchill, 215 A.D.2d 155, 158 (1st Dept. 1995), affd. 87 N.Y.2d 744 (1996), citing Koret, Inc. v. Christian Dior, S.A., 161 A.D.2d 156, 157 (1st Dept. 1990), appeal denied 76 N.Y.2d 714 (1990) (citations omitted).
In this action, plaintiff alleges that GT tortiously interfered with "discussions and negotiations" between Fenris and GT Value Products -- a division2 of GT -- concerning the development of a Vietnam game. Its bare conclusory allegations are insufficient to meet the more demanding standard necessary to state a cause of action for tortious interference with prospective contractual relations, which requires a showing of the use of wrongful means.3 NBT Bancorp Inc. v. Fleet/Norstar Financial Group, Inc., 87 N.Y.2d 614, 624 (1996).
Therefore, that branch of the motion seeking dismissal of the fourth and fifth causes of action for failure to state a cause of action is granted and they are dismissed.
Accordingly, it is hereby
ORDERED that defendant's motion to dismiss the complaint is granted as to the second, fourth and fifth causes of action, and, in all other respects, is denied, and it is further
ORDERED that defendant is directed to serve its answer to the remaining causes of action set forth in the complaint within ten (10) days after service of a copy of this order with notice of entry, and the action shall proceed expeditiously; and it is further
ORDERED that counsel shall appear at IAS Part 3 on November 30, 1999 at 11:00 A.M. for the purpose of entering into a Preliminary Conference Order.

DATED: October 13, 1999
ENTER:

__________________________
J.S.C.

"Bundling" refers to the marketing concept whereby a software game is packaged with other software which is distributed to the retail end-users with the computer system being purchased.

2

An unincorporated division of a corporation, unlike a subsidiary, is not a separate jural entity. Sheldon v. Kimberly-Clark Corp., 111 A.D.2d 912 (2d Dept. 1985).

3

`"Wrongful means"' include "physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure." Guard-Life Corp., supra, at 191.