Defendant Association of National Advertisers, Inc. moves, pursuant to CPLR 3211(a)(7), to dismiss the complaint of Decker, Decker & Associates, Inc. on the ground that each of the plaintiff's causes of action is predicated on a joint venture that does not exist. Defendant contends that the parties' written agreement clearly describes plaintiff as an independent contractor, hired to publish "The Advertiser," a monthly magazine dedicated to developments in the advertising industry, and that only after plaintiff's services were properly terminated in 2006 was a claim raised that the parties' relationship was a joint venture. Since the complaint fails to allege the elements required to establish a joint venture under New York law, namely an agreement to share losses, defendant argues for pre-answer dismissal.

It is plaintiff's contention that claims premised on the existence of a joint venture have been properly pled. However, to the extent that the complaint is deficient in any respect, plaintiff requests leave to re-plead and to assert alternative claims sounding in breach of contract and unjust enrichment. [*2]

The complaint alleges that plaintiff Decker, Decker & Associates, Inc. (DDA) is in the business of "custom publishing" (Complaint ¶ 3). In mid-1990, DDA conceived of a magazine to be called "The Advertiser" to be targeted to marketing and advertising professionals (¶ 4). In March of 1991, a business relationship was formed between DDA's predecessor-in-interest, defendant Association of National Advertisers, Inc. (the ANA) and the New York Times (the Times) to launch and publish the magazine in October 1991 (¶ 6). Profits were divided 65%—25%—10%, respectively, amongst the Times, the ANA, and DDA (¶ 7).

In November of 1992, the Times withdrew from the venture, and a new relationship was formed between DDA and the ANA (¶ 9). On December 1, 1992, the parties entered into a new agreement with respect to the publication of the magazine; the complaint defines this new arrangement as the joint venture (the 1992 Agreement) (¶ 10).^[FN1] As allegedly set forth in the 1992 Agreement, the parties' ownership interests in the joint venture were DDA 25% and the ANA 75%, "although [the ANA] owned 100% of the intellectual property rights developed by the Joint Venture" (¶ 11). DDA was to receive 25% of the net revenues (after payments to a reserve fund) from sales of The Advertiser or income derived from its publication (¶ 13).

The complaint further alleges that in or about April of 1997, Robert Liodice, the ANA's Senior Vice President, approached DDA's president and claimed that the ANA was in financial trouble and needed an infusion of capital (¶ 14). DDA was asked, " as a partner with the ANA,'" to forgo for an unspecified period of time, its entitlement to a participation of the first $300,000 in annual profits generated by the publication of The Advertiser (¶ 15). Premised on its understanding that DDA had a 25% interest in the joint venture, it is alleged that, commencing in1997 and continuing through 2005, DDA deferred its right to receive its portion of the profits of the joint venture to the extent of $655,912 (¶ 16). This sum was retained by the ANA on the understanding that it would be repaid to DDA either from the ANA's share of the proceeds of the joint venture or directly by the ANA (¶ 17). In addition, at the ANA's request, DDA advanced the sum of $81,300 to fund the joint venture in January 2002 and December 2005 (¶ 18) on the same understanding that it would be repaid by the ANA (¶ 19).

On February 23, 2006, the ANA unilaterally terminated the joint venture (¶ 21). At this time, DDA claims it was owed $86,107 for sponsorship and sales commissions (¶ 22). The complaint alleges that The Advertiser was an ongoing and profitable venture at the time DDA's services were terminated, has a fair market value in excess of $4 million (¶¶ 23, 25), and that the ANA continues to publish and distribute the magazine (¶ 24). DDA asserts three causes of action for an accounting, breach of fiduciary duty, and unjust enrichment.

In support of its motion to dismiss, defendant ANA offers a copy of the 1992 Agreement, referred to in the complaint as the basis for the joint venture. The second paragraph of this document provides, in full:

In order to continue, even improve, publication and distribution of the magazine The Advertiser ("TA") to best serve the needs and interests of regional, national and international advertisers, A.N.A. and DDA agree that each, acting discretely and solely as an independent contractor, shall perform and be compensated as hereinafter prescribed for it (emphasis added). [*3]

(Young Aff., Exh. A). Paragraphs I and II of the 1992 Agreement delineate the respective duties of DDA and the ANA. Among other duties, the ANA was to "exercise ultimate control over all editorial and operational policy decisions," and was responsible for paying the magazine's "cost of doing business," and to advance payment of $14,600 per issue against certain costs. Paragraph IV outlines the parties' compensation as a division of "net revenue" each quarter — 25% to DDA and 75% to the ANA. Paragraph V, entitled "Duration," provides:

This agreement shall continue indefinitely, but shall be subject to termination immediately following the next issue of TA upon written notice by either party to the other at least thirty (30) days prior to that issue. The terminating party shall not be liable to the other party for any damages (including "reliance" damages) allegedly due to such termination.

Finally, paragraph VI, entitled "Ownership," provides that "[a]ll rights, title and interests of every nature in and to TA, its trademarks, copyrights, and all other properties and rights, belong to A.N.A., and shall continue to do so throughout the duration of this agreement and after its termination."

The parties do not dispute that on November 19, 1993, the 1992 Agreement was amended, in writing. A new paragraph V provides, in pertinent part:

This agreement shall continue through December 31, 1994; provided, however, that if at any time the net profit (distribution) to "ANA" on any two (2) consecutive issues of "TA" shall fall below an average of $25,000.00, this agreement shall automatically terminate sixty (60) days after publication of the most recent issue of "TA," unless "DDA" gives "ANA" immediate written notice of such decline in profits and "ANA," within thirty (30) days thereafter, waives in writing such automatic termination.

Regardless of the termination of this relationship, commission shall be paid to [DDA] for all issues covered by orders received before notice of cancellation.

(Young Aff., Exh. D).

In opposition to defendant's motion to dismiss, DDA submits an affidavit from its president, John L. Decker, who offers the following additional factual averments about the parties' business relationship. He contends that when the Times sought to renegotiate the arrangement in 1991, the ANA was not willing to do so and, after discussions, DDA and the ANA decided to proceed with the publication of The Advertiser as a joint venture. He contends that in November 1992, he sent a memorandum to the ANA describing their new arrangement. The memo states "Ownership ANA 75% [plaintiff] 25%" (Decker Aff., Exh. E). Decker states that this arrangement is reflected in the 1992 Agreement, an agreement he claims to have signed without benefit of legal counsel.

DDA's initial dealings were with DeWitt F. Helm, Jr., who is no longer with the ANA. Decker wrote to Helm in April 2003 and asked that he memorialize the parties' relationship. Decker's letter states: "...The Times approached you to alter the relationship . . .Your reaction was to drop The Times and go with a 75% ANA/ 25% DDA ownership relationship" (Decker Aff., Exh. G). In a letter dated April 10, 2003, Helm acknowledged that after the Times withdrew, Decker and Helm "settled on a 75% ANA and 25% Decker Decker and Associates [*4]ownership relationship for The Advertiser" (id., Exh. H ).

The existence of the parties' partnership was allegedly expressly confirmed by the ANA in its own 1994 budget, which states that "1993 was the initial year of the publishing partnership of Decker Decker Associates (25%) and A.N.A. (75%) . . ." (Decker Aff., Exh. I). Decker further contends that in February of 1997, Robin Webster of the ANA confirmed in a letter to Decker that the parties had a "partnership" (id., Exh. K), and that Decker responded to Webster's letter on April 21, 1997, confirming that the status of the parties' relationship was that of "a partnership."

Decker contends that the expenses DDA incurred in publishing The Advertiser were charged as expenses of the joint venture and were deducted in computing the 75/25 split. Because of the substantial nature of these expenses, DDA received monthly payments from the ANA to cover them. The monthly advances were used by plaintiff to defray expenses such as editorial, art direction, art materials, production supervision and sales. However, Decker contends that these payments did not cover DDA's overhead, and amounted to only one-half of what would have been standard in the industry for the work DDA was doing.

Decker maintains that his company's profit or loss was as a partner in The Advertiser, and that if the magazine had not been profitable, DDA would have suffered extensive losses. At the ANA's insistence, DDA devoted almost all of its time and efforts to the joint venture, and turned down other business. If the venture had not yielded sufficient revenues, DDA would have been "out-of-pocket" to cover rent, supplies, salaries and other unspecified expenses. He contends that the cost of printing The Advertiser was $25,000 per issue, for which DDA had been responsible and would have lost if the magazine had incurred losses, but that the issue never arose because, fortunately, there were no such losses.

Decker further contends that DDA was willing to allow the ANA to receive more than its fair share starting in or about April 1997 in order that the venture could proceed and be profitable for both parties. If, as the ANA now contends, Liodice's statements as to the ANA's poor financial status were not true, then the ANA acted in bad faith in order to induce DDA to make those concessions.

Finally, Decker argues that while the ANA had the right to terminate the joint venture, it had no right to misappropriate plaintiff's 25% interest in The Advertiser and to ignore the fact that DDA was owed an additional $735,000 for its share of revenues which it had deferred at the behest of the ANA. Decker claims that between 1993 through 2005, the ANA received over $3.6 million in profits. Thus, he maintains that the magazine has a fair market value in excess of $4 million, and that the ANA arrogated to itself 100% ownership of The Advertiser ignoring DDA's 25% interest, which is worth $1 million.

When presented with a motion to dismiss pursuant to CPLR 3211(a)(7), the complaint must be construed liberally, the facts alleged therein accepted as true, and plaintiff accorded the benefit of every possible favorable inference (511 West 232nd Owners Corp. v Jennifer Realty Corp., 98 NY2d 144, 151-152 [2002]; Richbell Info. Servs., Inc. v Jupiter Partners, L.P., 309 AD2d 288, 289 [1st Dept, 2003]). While a complaint is to be liberally construed, the court is not required to accept factual allegations that are negated beyond substantial question by documentary evidence or allegations consisting of bare legal conclusions (Blackgold Realty Corp. v Milne, 119 AD2d 512, 513 [1st Dept, 1986], affd 69 NY2d 719 [1987]; Jordan v UBS [*5]AG, 11 AD3d 283, 285 [1st Dept, 2004]; Ullmann v Norma Kamali, Inc., 207 AD2d 691, 692 [1st Dept, 1994]).

In defendant's reply papers, it is argued that I may not consider the affidavit and documentary evidence submitted by plaintiff's president unless I convert the motion to a motion for summary judgment pursuant to CPLR 3211(c). However, the only appellate authority defense counsel cites stands for the unremarkable principle that a court must ignore factual issues raised in affidavits offered by the moving party which challenge factual allegations in the pleading under attack (FYM Clinical Lab., Inc. v Perales, 147 AD2d 840, 841 [3d Dept], affd sub nom Medicon Diagnostic Lab., Inc. v Perales, 74 NY2d 539 [1989]). In assessing a motion under CPLR 3211(a)(7), it is well-settled that the court may consider affidavits submitted by the plaintiff to remedy any defects in the (AG Capital Funding Partners, L.P. v State Street Bank and Trust Co., 5 NY3d 582, 591 [2005]; Rovello v Orofino Realty Co., 40 NY2d 633, 635-36 [1976]; Sheila C. v Povich, 11 AD3d 120, 130 [1st Dept, 2004]). "[T]he criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one" (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]; see also Rovello v Orofino Realty Co., 40 NY2d, supra at 636). Accordingly, I accept and will consider the Decker affidavit, and documents attached, in deciding this motion.

The first cause of action seeks dissolution and liquidation of the alleged joint venture and a full accounting of DDA's alleged 25% share of The Advertiser. The second cause of action alleges that the ANA breached its fiduciary obligations to DDA by misappropriating the business and assets of The Advertiser. Both sides agree that the validity of both causes of action turns on whether DDA can establish the existence of a joint venture.

"A joint venture is a special combination of two or more persons where in some specific venture a profit is jointly sought" (Gramercy Equities Corp. v Dumont, 72 NY2d 560, 565 [1988], quoting Forman v Lumm, 214 App Div 579, 583 [1st Dept, 1925]). The indicia of the existence of a joint venture are: (i) acts manifesting the intent of the parties to be associated as joint venturers; (ii) mutual contribution to the joint undertaking through a combination of property, financial resources, effort, skill or knowledge; (iii) a measure of joint proprietorship and control over the enterprise; and (iv) a provision for the sharing of profits and losses (Richbell Info. Servs., Inc. v Jupiter Partners, L.P., 309 AD2d, supra at 298, citing Tilden of New Jersey, Inc. v Regency Leasing Sys., Inc., 230 AD2d 784, 785-86 [2d Dept, 1996]). "The ultimate inquiry is whether the parties have so joined their property, interests, skills and risks that for the purpose of the particular adventure their respective contributions have become as one and the commingled property and interests of the parties have thereby been made subject to each of the associates on the trust and inducement that each would act for their joint benefit" (Steinbeck v Gerosa, 4 NY2d 302, 317, appeal dismissed 358 US 39 [1958]).

Here, the 1992 Agreement clearly and unequivocally provides that it was the initial intent of the parties to be associated "discretely and solely as an independent contractor;" that all right, title and interest of every nature in and to The Advertiser belongs to the ANA; and that the ANA was to be responsible for The Advertiser's "cost of doing business." Thus, the allegation of paragraph 10 of the complaint that this document forms the basis of a joint venture between DDA and the ANA is flatly contradicted by its very terms. The "mere assertion by a party that [*6]contract language means something other than what is clear when read in conjunction with the whole contract is not enough to create an ambiguity sufficient to raise a triable issue of fact" (New York City Off-Track Betting Corp. v Safe Factory Outlet, Inc., 28 AD3d 175, 177-78 [1st Dept, 2006]).

Nevertheless, this does not mandate dismissal of the complaint. Questions of fact have been raised as to whether the 1992 Agreement, as amended on November 19, 1993, expired by its terms at the end of 1994, and whether the parties, who continued to jointly publish The Advertiser until early 2006, were then operating pursuant to some other and different business relationship that may rise to the level of a joint venture or give rise to a breach of contract.

Although defendant argues that the 1992 Agreement governed the parties' 14-year business relationship, in November 1993, they agreed in writing that the duration of the agreement would be changed from continuing indefinitely to continuing through December 31, 1994. Indeed, defense counsel admits that from 1993 to 2006 certain aspects of the parties' relationship was not governed by the terms of the 1992 Agreement. Defense counsel contends that the ANA paid DDA far more than the 25% of net profits which it was entitled to under the 1992 Agreement, and that beginning in 1993 the ANA began compensating DDA under a fee-based system.

The complaint also alleges that in April 1997, Decker was approached by the ANA, which was allegedly in financial trouble and in need of an infusion of capital, and asked if DDA would agree to forgo for an unspecified period of time, its entitlement to participate in the first $300,000 of annual profits from the magazine. DDA alleges that it agreed to this request, premised on the parties' mutual understanding that the parties were "partners" and that DDA had a 25% ownership interest in The Advertiser. It is further alleged that, commencing in 1997 and continuing through 2005, DDA deferred its right to receive its portion of the profits of The Advertiser to the extent of $655,912. In addition, at the ANA's request, DDA advanced the sum of $81,300 to fund the magazine in January 2002 and December 2005.

Defendant ANA maintains that even if the 1992 Agreement does not completely dispose of the plaintiff's joint venture claim, the complaint fails to allege any provision for the sharing of losses. A joint venture is a "mutual promise or undertaking of the parties to share in the profits of the business and submit to the burden of making good the losses (emphasis in original)" (Steinbeck v Gerosa, 4 NY2d, supra at 317). However, a joint venture may exist although the participants "suffer losses in different proportions" (Richbell Info. Servs., Inc. v Jupiter Partners, L.P., 309 AD2d, supra at 298). In Kraemer v World Wide Trading Co., 195 App Div 305 (1st Dept, 1921), the Court sustained a complaint alleging a joint venture to act as brokers in the procurement of steamships for a foreign corporation, rejecting the defendant's argument that plaintiff was merely an employee entitled to one-half of any commissions earned, finding that "since the plaintiff took the risk of receiving nothing for his services" a joint venture was adequately plead (id., at 308). "An individual who offers services for a share of the net profits from several transactions, risks losing the value of those services, and therefore is subject to losses" (Ramirez v Goldberg, 82 AD2d 850, 852 [2d Dept, 1981], citing Marston v Gould, 69 NY 220, 224-25 [1877] ["A share in the net profits is an interest in the profits as profits, and implies a participation in the profits and losses."]).

Defendant's reliance on the language of paragraph II of the 1992 Agreement, which [*7]provides that the ANA was responsible to pay for The Advertiser's cost of doing business, as dispositive of this motion to dismiss is misplaced. The ANA looks only to the four corners of 1992 Agreement in making its argument that plaintiff did not shoulder any of the burden of potential losses or liabilities. As stated above, a question of fact exists as to whether the parties continued to operate under that document as early as 1993.

The complaint alleges that plaintiff was entitled to share in 25% of the "net revenues" of the magazine. In addition, the Decker affidavit satisfies any pleading deficiency in the complaint by his allegation that "DDA's profit or loss was as a partner in The Advertiser" (Decker Aff. ¶ 24). Decker avers that DDA had much to lose working on The Advertiser and would have incurred substantial liability in the event The Advertiser suffered losses. DDA allegedly shared the burden of losses, because the monthly advances received from the ANA did not cover DDA's overhead, and amounted to only one-half of what would have been standard in the industry for the work DDA was doing. In addition, Decker contends that his company's potential risk was greatly increased because of the ANA's insistence that DDA devote essentially all of its time and resources to The Advertiser.

Defendant's reliance on cases where joint venture claims were dismissed are either factually distinguishable or arose in a different procedural context. In Steinbeck v Gerosa, supra , the Court of Appeals merely recognized that a royalty agreement entitling an author to a percentage of the gross receipts from the sale of books and derivative works did not constitute a joint venture with the publisher, because, in fact, "there was to be no sharing of losses" (4 NY2d at 317). In Ginsberg v Schron, 288 AD2d 146 (1st Dept, 2001), and National Comm. on the Observance of Mother's Day v Kirby, Block & Co., Inc., 17 AD2d 390 (1st Dept, 1962), it was apparent from the parties' written agreements that no joint venture existed.

In Davella v Nielsen, 208 AD2d 494 (2d Dept, 1994), summary judgment dismissing a joint venture claim where the plaintiff failed to allege "any agreement to share the burden of losses." Likewise, in both Andrews v Cerberus Partners, 271 AD2d 348 (1st Dept, 2000), and Latture v Smith, 1 AD3d 408, 408-09 (2d Dept, 2003), joint venture claims were dismissed due to the absence of any allegations that the parties were to share the burden of losses of the alleged enterprise.

Accordingly, defendant's motion to dismiss the first and second causes of action is denied.

Defendant contends that the third cause of action for unjust enrichment must be dismissed because it is predicated on the existence of a joint venture and because a valid contract exists governing the subject matter of this dispute. However, as stated above, plaintiff has adequately pled the existence of a joint venture, and while a valid and enforceable contract precludes an allegation of quasi-contract (Clark-Fitzpatrick, Inc. v Long Island R.R. Co., 70 NY2d 382, 388 [1987]; Surge Licensing, Inc. v Copyright Promotions Ltd., 258 AD2d 257, 258 [1st Dept, 1999]), there are issues of fact as to whether the 1992 Agreement conclusively governs the parties' business arrangement (IIG Capital LLC v. Archipelago, L.L.C., 36 AD3d 401, 829 NYS2d 10, 13-14 [1st Dept, 2007]; Joseph Sternberg, Inc. v Walber 36th Street, 187 AD2d 225, 227-28 [1st Dept, 1993]).

Finally, plaintiff requests leave to assert alternative claims sounding in breach of contract [*8]and unjust enrichment to recover the amounts that it allowed the ANA to withdraw in excess of its 75% share of the profits. Since plaintiff's right to amend the complaint as of right continues until 20 days after defendant serves a responsive pleading (CPLR 3025[b]), permission to amend the complaint is not required.

For the foregoing reasons, it is hereby

ORDERED that defendant's motion to dismiss the complaint is denied; and it is further

ORDERED that defendant shall serve and file an answer to the complaint within 10 days of service of a copy of this order with notice of entry and it is further

ORDERED that a Preliminary Conference will be held on May 2, 2007 at 10:00 a.m.

Dated: April 10, 2007

ENTER:

____________________________________

J.S.C.