Robyn
Asimov and JANET ASIMOV, as Co-Executors of THE ESTATE OF ISAAC
ASIMOV, , Plaintiffs,
against
Trident Media Group, LLC and ROBERT GOTTLIEB,
Defendants.
|
654129/2013
Jaspan Schlesinger LLP, for plaintiffs.
Frankfurt Kurnit Klein & Selz, P.C., for defendants.
Shirley Werner Kornreich, J.
Defendants Trident Media Group, LLC (TMG) and Robert Gottlieb move, pursuant
to CPLR 3211, to dismiss the Complaint. Plaintiffs Robyn Asimov and Janet Asimov, as
co-Executors of the Estate of Isaac Asimov (the Estate), oppose the motion and also
cross-move, pursuant to CPLR 1018 & 1021, to substitute Asimov Holdings LLC
(Holdings) as plaintiff in their stead. Defendants do not oppose the cross-motion, but
maintain that it is moot if their motion to dismiss is granted. For the reasons that follow,
defendants' motion to dismiss is granted and plaintiffs' cross-motion is denied as moot.
Procedural History & Factual Background
As this is a motion to dismiss, the facts recited are taken from the Complaint.
Isaac Asimov, a prolific writer of science fiction, died in 1992. Complaint
¶¶ 4-5. His daughter, Robyn, and wife, Janet, are co-Executors of his estate.
¶¶ 8-10. TMG is a literary service agency. ¶ 11. Gottlieb is an employee
of TMG. ¶ 12.In a contract dated September 11, 2008 (the Agreement), the Estate
agreed to pay TMG to be
[the Estate's] exclusive representative and grant to TMG the sole and
exclusive worldwide right to negotiate agreements for (a) the sale, license or other
disposition of all literary works [] in which [the Estate] hold[s] a copyright interest
(collectively, the "Works"), all Versions of the Works, and, if applicable (b) the Services.
As used herein "Services" means any services (e.g., screenwriter, producer etc.) which
[the Estate] may render incidental to the sale, license or other disposition of the Works
and/or Versions of the Works.
¶¶ 1, 13; see Dkt. 7 at 15. The Agreement had a two-year
term.
The Agreement provides that it "automatically shall be extended for successive,
additional periods of two (2) years each, unless the party wishing to terminate this
Agreement gives written notice of termination to the other within [120] days prior to the
date on which the Term otherwise would expire." Complaint ¶¶ 16-17;
see Dkt. 7 at 15. The Agreement further provides that
TMG shall make reasonable efforts to keep [the Estate] advised as to all
negotiations that TMG undertakes on [the Estate's] behalf hereunder. Any and all
agreements negotiated by TMG hereunder shall be subject to [the Estate's] approval and
shall be entered into by [the Estate] and in [the Estate's] name. [The Estate] shall refer to
TMG all inquiries pertaining to the Works, any Versions of the Works and the Services
to facilitate the performance of TMG's functions hereunder.Dkt. 7 at 15. The Agreement
is governed by New York law. Id. at 18.On November 4, 2013, the Estate sent
TMG a cease and desist letter, in which the Estate accused TMG of breach and
demanded that it immediately stop acting as the Estate's representative. Complaint ¶
18. The Estate further contended that the Agreement terminated at the end of its original,
two-year term, on September 10, 2010. Id. It is undisputed that, prior to
November 4, 2013, the Estate never provided TMG with a written termination notice, nor
did TMG inform the Estate that it was relying on the Agreement's automatic renewal
provision prior to the two contract renewals. TMG responded in a letter dated November
8, 2013, that the Agreement was not terminated. ¶ 19.[FN1]
The Estate commenced this action on November 27, 2013. The Complaint asserts
two causes of action: (1) violation of New York General Obligations Law (GOL) §
5-903; and
(2) deceptive business practices pursuant to New York General Business
Law (GBL) § 349. On its first cause of action, the Estate requests a judicial
declaration that the contract terminated on September 10, 2010, and an injunction
enjoining TMG from representing the Estate, holding themselves out as the Estate's
representative or interfering with the Estate's rights to license, sell or otherwise dispose
of any of the Estate's literary work. The Estate requests money damages on the second
cause of action.
Defendants now move to dismiss. They argue that: (1) GOL § 5-903 does not
apply to the Agreement; (2) GBL § 349 does not apply to the parties arms' length
transaction and, in any event, cannot be predicated on something expressly permitted by
the contract; and (3) the Complaint fails to state a claim against Gottlieb individually.
The Estate disputes defendants' first two arguments, but does not oppose dismissal of
Gottlieb as a defendant. The claims against Gottlieb, therefore, are dismissed.
Additionally, the Estate cross-moves to substitute Holdings as plaintiff based on a
Copyright Assignment, dated January 7, 2014, which assigned the rights under the
subject works to Holdings. See Dkt. 13. TMG does not oppose substitution, but
contends the proposed substitution is unnecessary because the Complaint fails to state a
claim upon which relief can be granted.
Discussion
On a motion to dismiss, the court must accept as true the facts alleged in the
complaint as well as all reasonable inferences that may be gleaned from those facts. Amaro v Gani Realty Corp., 60
AD3d 491 (1st Dept 2009); Skillgames, LLC v Brody, 1 AD3d 247, 250 (1st Dept
2003), citing McGill v Parker, 179 AD2d 98, 105 (1992); see also Cron v
Harago Fabrics, 91 NY2d 362, 366 (1998). The court is not permitted to assess the
merits of the complaint or any of its factual allegations, but may only determine if,
assuming the truth of the facts alleged, the [*2]complaint
states the elements of a legally cognizable cause of action. Skillgames, id.,
citing Guggenheimer v Ginzburg, 43 NY2d 268, 275 (1977). Deficiencies in the
complaint may be remedied by affidavits submitted by the plaintiff. Amaro, 60
NY3d at 491. "However, factual allegations that do not state a viable cause of action, that
consist of bare legal conclusions, or that are inherently incredible or clearly contradicted
by documentary evidence are not entitled to such consideration." Skillgames, 1
AD3d at 250, citing Caniglia v Chicago Tribune-New York News Syndicate, 204
AD2d 233 (1st Dept 1994). Further, where the defendant seeks to dismiss the complaint
based upon documentary evidence, the motion will succeed if "the documentary evidence
utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a
matter of law." Goshen v Mutual Life Ins. Co. of NY, 98 NY2d 314, 326 (2002)
(citation omitted); Leon v Martinez, 84 NY2d 83, 88 (1994).
GOL § 5-903(2)
GOL § 5-903(2) provides:
No provision of a contract for service, maintenance or repair to or for any
real or personal property which states that the term of the contract shall be deemed
renewed for a specified additional period unless the person receiving the service,
maintenance or repair gives notice to the person furnishing such contract service,
maintenance or repair of his intention to terminate the contract at the expiration of such
term, shall be enforceable against the person receiving the service, maintenance or repair,
unless the person furnishing the service, maintenance or repair, at least fifteen days and
not more than thirty days previous to the time specified for serving such notice upon him,
shall give to the person receiving the service, maintenance or repair written notice,
served personally or by certified mail, calling the attention of that person to the existence
of such provision in the contract.
See Donald Rubin, Inc. v Schwartz, 160 AD2d 53, 56 (1st Dept
1990) (discussing history of New York's restrictions on automatic renewal clauses).
As the Appellate Division recently explained, while GOL § 5-903(2)
"does not define personal property' § 5-903(2) has been analyzed by courts in a
variety of circumstances to determine its applicability. Personal property has been
interpreted to include intellectual property as well as tangible personal property." Healthcare I.Q., LLC v Chao,
118 AD3d 98, 103 (1st Dept 2014) (collecting cases), accord Tel. Secretarial
Serv. v Sherman, 28 AD2d 1010, 1011 (2d Dept 1967) ("The words service,
maintenance or repair' in [GOL § 5-903(2)] are to be generously read in order that
their scope will engage the variegated evil the statute was intended to meet"). However,
where the services rendered are "merely of a consulting, analytical or administrative
nature," GOL § 5-903(2) is inapplicable. Id. at 104, citing Donald
Rubin, 160 AD2d at 56-57; see also Carbo Indus., Inc. v Coastal Refining &
Marketing, Inc., 154 FedAppx 218, 220 (2d Cir 2005) (personal services contracts,
such as consulting contracts, are "limited exception" to GOL § 5-903).The parties
dispute whether TMG's services as the Estate's literary agent fall under the ambit of
§ 5-903(2) or are covered by the consulting exception. In reviewing the applicable
caselaw, this appears to be a question of first impression under New York law. While a
federal court in California recently held that § 5-903(2) applies to a similar
agreement [see Mann v MediaNet Digital, Inc., No. 2:13-cv-05269, Dkt. 26 (CD
Cal Nov. 27, 2013)], no controlling New York precedent exists. In light of the novelty of
this issue, the court declines to address the applicability of § 5-903(2) because, on
the facts presented, the court cannot issue the requested [*3]declaratory judgment.
The parties do not dispute that, regardless of whether the Agreement
terminated in September 2010, the Estate is obligated to pay for TMG's services rendered
though November 4, 2013, which the Estate knew about but did not object to. Dkt. 20
(7/22/14 Tr. at 13) (plaintiff's counsel admitted the obligation to pay "for any deals that
[the Estate] entered into that [TMG] represented us on prior to the termination date of
[November 4, 2013]"); see Ludl
Elecs. Prods., Ltd. v Wells Fargo Fin. Leasing, Inc., 6 AD3d 397, 398 (2d Dept
2004) (plaintiff having continued beneficial use of equipment not entitled to recover
lease payments pursuant to GOL § 5-901; moreover, GOL § 5-901 does not
entitle plaintiff to knowingly and willingly continue to accept benefit without
compensating defendant). Consequently, there is no pending fee dispute between the
parties. As further explained below, since the GBL claim is also legally deficient, the
parties' dispute over whether the Agreement is currently in place has no further, practical
ramifications. Hence, issuing a declaratory judgment on the matter would be
improper.[FN2]
The court reaches this conclusion based on Ovitz v Bloomberg L.P., 77 AD3d 515 (1st Dept (2010),
aff'd 18 NY3d 753 (2012). In Ovitz, the plaintiff challenged the automatic
renewal provision of his Bloomberg terminal subscription agreement under GOL §
5-903(2) and GBL § 349. See 18 NY3d at 756. The Appellate Division held
that § 5-903(2) applied, and thus the automatic renewal provision was
unenforceable since Bloomberg failed to provide plaintiff with the requisite notice that it
intended to rely on the renewal provision. See 77 AD3d at 515-16. Nonetheless,
the Appellate Division dismissed the action, refusing to issue a declaratory judgment
because "plaintiff makes no allegations that he paid for services he did not receive."
Id. at 516. The Court of Appeals affirmed, noting that Bloomberg waived its
claim for fees, and, therefore, plaintiff incurred no monetary damages. See 18
NY3d at 757. The Court held that "[i]n light of the absence of actual injury there is
neither a justiciable controversy upon which declaratory judgment can be rendered, nor
irreparable harm necessary for injunctive relief." Id. at 760.[FN3]
Here, as in Ovitz, there is neither a justiciable controversy nor irreparable
harm.
[*4]GBL § 349
Moreover, the Court of Appeals in Ovitz also held that the GBL
§ 349 claim should be dismissed because such a claim fails in the absence of any
injury to plaintiff. Id. at 759. That is the case here. Additionally, the Estate's GBL
§ 349 claim is not viable for two other reasons.
"A plaintiff under [GBL § 349] must prove three elements: first, that
the challenged act or practice was consumer-oriented; second, that it was misleading in a
material way; and third, that the plaintiff suffered injury as a result of the deceptive act."
Stutman v Chemical Bank, 95 NY2d 24, 29 (2000). As already noted, there is no
injury here. Further, the instant Agreement is not "consumer-oriented." See Medical Soc. of State of NY v
Oxford Health Plans, Inc., 15 AD3d 206, 207 (1st Dept 2005) (" Consumers' are
those who purchase goods and services for personal, family or household use'"); Continental Cas. Co. v Nationwide
Indem. Co., 16 AD3d 353, 354 (1st Dept 2005) ("These allegations, liberally
construed, at best show a private contract dispute over policy coverage and the
processing of defendants' claims, not conduct affecting the consuming public at large,
and thus do not state a cause of action under § 349"), accord NY Univ. v
Continental Ins. Co., 87 NY2d 308, 320-21 (1995). Finally, a GBL § 349 claim
does not lie when the alleged deceptive practice, as here, was a matter explicitly
disclosed in and permitted under the parties' written agreement. Broder v MBNA
Corp., 281 AD2d 369, 371 (1st Dept 2001), citing Sands v Ticketmaster-New
York, Inc., 207 AD2d 687 (1st Dept 1994); see also Zuckerman v BMG Direct
Mktg., Inc., 290 AD2d 330, 331 (1st Dept 2002).In sum, the declaratory judgment
claim fails because it does not impact on any actual financial controversy between the
parties.[FN4]
The GBL claim fails because the statute does not apply to the Agreement. Accordingly, it
isORDERED that the motion to dismiss by defendants Trident Media Group, LLC and
Robert Gottlieb is granted and plaintiff's cross-motion is denied, and the Clerk is directed
to enter judgment dismissing the Complaint.
Dated: August 15, 2014ENTER:
__________________________
J.S.C.
Footnotes
Footnote 1: According to TMG, the
Agreement is currently set to expire in September 2014.
Footnote 2: While the parties
indicated that an HBO deal that was at the route of this dispute but which never came to
pass is a possibility, it is well settled that a "hypothetical possibility that a lawsuit might
be filed is not sufficiently immediate and real to constitute a justiciable controversy." Spitzer v Schussel, 48 AD3d
233, 234 (1st Dept 2008); see Waterways Dev. Corp. v Lavalle, 28 AD3d 539, 540
(2d Dept 2006) ("A justiciable controversy must involve a present, rather than
hypothetical, contingent or remote, prejudice to the plaintiff").
Footnote 3: The dissent in
Ovitz took a broader view of the circumstances when a declaratory judgment
should be issued. See 18 NY3d at 760-64 (Pigott, J., dissenting) If the dissent's
position was the law, this court would have reached the merits of the § 5-903(2)
claim. However, the majority's opinion in Ovtiz clearly precludes this court from
rendering a declaratory judgment on whether the Agreement terminated in 2010 by virtue
of § 5-903(2) where, as here, the parties have no current fee dispute that turns on
such a determination. Indeed, this is a good rule since the law differentiates between an
automatic renewal period in which plaintiff accepted services without objection and a
situation where plaintiff objected to further services while defendant insisted on
collecting additional fees under the automatic renewal provision. In the former scenario,
quantum meruit compensation is recoverable [see Edward S. Gordon Co., v Peninsula
NY Partnership, 245 AD2d 189, 190 (1st Dept 1997), accord Martin H. Bauman
Assocs., Inc. v H & M Int'l Transport, Inc., 171 AD2d 479, 484 (1st Dept
1991)], while the latter situation is precisely the sort of "variegated evil the statute was
intended to meet." See Tel. Secretarial Serv., 28 AD2d at 1011, citing
Peerless Towel Supply Co. v Triton Press, Inc., 3 AD2d 249, 251 (1st Dept 1957)
("This bill seeks to protect all businessmen from fast talking sales organizations armed
with booby traps which they plant in business contracts many unsuspecting small
businessmen are taken in by such evil practices").
Footnote 4: The dismissal of this
action shall not prejudice either party's rights to sue for any actual unpaid amounts due
under the Agreement. That being said, assuming the parties' representations at oral
argument were accurate, no such suit appears to be forthcoming.