Opinion
402622-2009.
March 1, 2010.
DECISION/ORDER
MEMORANDUM DECISION
Defendants Tuff City Records ("TCR"); TuffAmerica, Inc. ("TAI"); OF School Flava ("OSF"); Street Tuff Tubes ("STT") (collectively "Tuff City"); and Aaron Fuchs ("Fuchs") (collectively "defendants"), move pursuant to CPLR 2214, CPLR 321 1(a)(1), CPLR 321 1(a)(7), CPLR 3211(c) and CPLR 325(d), to dismiss the Complaint against Fuchs in its entirely and to dismiss all claims except for Count Five for breach of contract brought by plaintiff Carlos Mandes ("Mandes") against Tuff City, and to transfer this remaining cause of action to the Small Claims Part of the New York City Civil Court.
CPLR 2214 pertains to "Motion papers; service; time" and not provide a basis tor relief.
Factual Background
For 27 years, Tuff City was in the business of producing, recording and distributing hip-hop music and rap. TAI (which became the successor-in-interest to Frost Belt International ("FBI") in September 1991) now produces and distributes reissued and remastered recordings, owns and administers the copyrights to more than 10,000 master recordings, and licenses music for use in television shows and commercials.
Plaintiff Curtis Brown ("Brown") aka Curtis Fischer, performs as "Grandmaster Caz" as a solo artist and as part of the Cold Crush Brothers along with plaintiff Carlos Mandes ("Mandes"), who performs as DJ Charlie Chase,
On October 20, 1982, Brown and Mandes, as part of Cold Crush Brothers, signed a recording and publishing agreement with FBI (the "1982 Agreement"). Paragraph 1 provides that this agreement pertains to the first eight songs created by the group, including "Fresh, Wild, Fly and Bold" and "Punk Rock Rap." Paragraph 7 provides that Tuff City owns the copyrights to the compositions for the songs recorded by Tuff City and that the Cold Crush Brothers are to receive half of all income generated from these compositions (See Exhibit A).
On March 15, 1983, Brown and Mandes, as part of Cold Crush Brothers, signed a 23-page recording contract with FBI (the "1983 Agreement"). Paragraphs 9 and 10 set forth royally rates for record sales. Further, paragraph 11.03 provides, in relevant part:
Tuff City will maintain books and records which report the sales of the Phonograph Records for which royalties arc payable to you. You may, at your own expense, examine those books and records [of Tuff City] as provided by this paragraph only. You may make those examinations only for the purpose of verifying the accuracy of the statements sent to you under paragraph 11.01. You may make such an examination for a particular statement only once, and only within two years after the date when Tuff City is required to send you that statement under paragraph 11.01. . . . If you wish to make an examination you will be required to notify Tuff City at least 30 days before the date when you plan to begin it. . . .
Paragraph 1 1.01 requires Tuff City to:
compute your royalties as of each June 30th and December 31st for the prior six months, in respect of each such six-month period in which there are sales or returns of Records on which royalties are payable to you. On the next September 30th or March 31st Tuff City will send you a statement covering those royalties and will pay you any royalties which are due after deducting unrecouped Advances. . . .
Paragraph 1 1.05 of plaintiffs' agreement provides in relevant part:
If you have any specific objections to a royalty statement, you will give Tuff City specific notice of that objection and your reasons for it within two years after the date when Tuff City is required to send you that statement under paragraph 11.01. Each royalty statement will become conclusively binding on you at the end of that two-year period, and you will no longer have any right to sue Tuff City in connection with any royalty accounting, or to sue Tuff City for royalties on Records sold during the period a royalty accounting covers, unless you commence the suit within that two-year period. If you commence suit on any controversy or claim concerning royalty accountings rendered to you under this agreement, the scope of the proceeding will be limited to determination of the amount of the royalties due for the accounting periods accrued concerned, and the court will have no authority to consider any other issues or award any relief except recovery of any royalties found owing. Your recovery of any such royalties will be the sole remedy available to you or the Artist by reason of any claim related to Tuff City's royalty accountings. Without limiting the generality of the preceding sentence, neither you nor the Artist will have any right to seek termination of this agreement or avoid the performance of your obligations under it by reason of any such claim.
From 1983 to 1985, the Cold Crush Brothers executed several amendments and side agreements to the 1983 Agreement.
On March 23, 1985, Brown entered into a solo recording agreement with FBI (the "Brown Solo Rider"), which referenced the 1983 Agreement. The Brown Solo Rider, which contains a provision in paragraph 9 therein, indicates that Brown '"will not participate, directly or indirectly, in any actions or suits brought by the Cold Crush Brothers against Tuff City or Aaron Fuchs" (the "Non-Participation Clause").
On March 23, 1985, Brown also entered into a songwriter agreement (the "Brown Songwriter Agreement").
According to defendants, throughout the 1980s and early 1990s, Brown and TAJ executed many agreements extending Brown's recording agreement and otherwise expanding upon his recording career.
As a result of the alleged failure of defendants to pay plaintiffs royalties and fees, plaintiffs, along with other individuals, commenced an action in November 2008 against defendants for breach of contract, an accounting, unjust enrichment and rescission as Lockett, et at. v Tuff City Records, et al. (the "Lockett Action").
In September 2009, this Court granted defendants' motion to sever the plaintiffs from the Lockett Action and in October 1999, plaintiffs commenced this action alleging claims of breach of contract, rescission, and unjust enrichment.
Defendants now move to dismiss the complaint, except for Mandes' breach of contract action.
Defendants argue that plaintiffs' causes of action for rescission should be dismissed because plaintiffs expressly waived their right to bring any such action pursuant to the clear and unambiguous terms of paragraph 11.05 of the 1983 Agreement and the Brown Solo Rider. Such paragraph precludes plaintiffs from seeking to rescind the agreements at issue. Moreover, this remedy is unavailable to plaintiffs because defendants performed pursuant to the agreements by paying royalty advances and providing royalty statements to plaintiffs. In the absence of fraud, a contract assigning rights in a musical composition cannot be rescinded for nonpayment of royalties unless the failure to pay royalties is "total." The documentary evidence proves that the Cold Crush Brothers and Brown as a solo performer were paid royalty advances and income pursuant to the agreements. Thus, plaintiffs may not seek rescission of their agreements.
Further, defendants argue, plaintiffs' unjust enrichment claims should be dismissed as duplicative of plaintiffs' breach of contract claims. Plaintiffs allege no duty owed to them by defendants independent of the contracts at issue. It is only in cases where there is a bona fide dispute to the existence of a contract may plaintiff plead alternative theories of recovery and here, there is no dispute that a written contract exists covering the subject matter of this action. All of plaintiffs' claims arise out of a common nucleus of facts which begin with defendants' alleged breach of their agreements with plaintiffs. Thus, the unjust enrichment claim should be dismissed.
As to the accounting claims, defendants maintain that such claims should be dismissed because plaintiffs contractually waived the right to bring these claims pursuant to paragraph i 1.05 noted above, and failed to plead an action for an accounting. Additionally, plaintiffs fail to address the clear and unambiguous language in paragraph 11.03 concerning accountings. And, plaintiffs failed to properly plead an action for an accounting because: 1) plaintiffs never sought an accounting pursuant to the accounting provisions set forth above, and 2) defendants provided plaintiffs with an accounting that defendants conducted, at great expense, reporting all licensing and sales of plaintiffs' recordings and compositions for six years from the date the Lockett Action was originally filed. Defendants provided plaintiffs with more than six years of detailed licensing and sales information during discovery, as exhibits to the motion to sever this action, and in connection with the parties' confidential settlement discussions. Most of the information was provided prior to the filing plaintiffs' Complaint. Thus, plaintiffs' accounting claims must be dismissed.
Also, Brown may not participate in this action as a member of the Cold Crush Brothers or as a solo artist because he contractually agreed not to sue the defendants. Brown signed the Brown Solo Rider agreeing not to participate in any suit brought by The Cold Crush Brothers against Tuff City or Aaron Fuchs, and nothing about Brown's promise not to sue Tuff City or Fuchs is against the public interest. Moreover, the contractual terms are clear and unambiguous. When parties set down their agreement in a clear, complete document, their writing should be enforced according to its terms. Accordingly, Brown's claims should be dismissed pursuant CPLR 3211(a)(1).
Furthermore, all causes of action against Fuchs should be dismissed because plaintiffs failed to plead that the court should pierce the corporate veil. Even if Brown's causes of actions are left in this action and the two year limitations on damages set forth in the defendants' agreements are ignored, the total amount of damages at stake in this action do not exceed about $1400. This is not an amount that warrants a personal lawsuit against the owner of Tuff City on a veil-piercing theory. There is no allegation that Fuchs abused doing business in the corporate form in order to breach the recording agreements with plaintiffs, Plaintiffs' conclusory allegations against Fuchs are insufficient to pierce the corporate veil. Plaintiffs do not and cannot allege that Fuchs used the corporate defendants to accomplish his own and not the corporation's business or that he defrauded or wronged the plaintiffs in such a way that equity requires the Court to circumvent the protections of the corporate form. Moreover, plaintiffs do not allege that TAI is incapable of satisfying a potential judgment. And, there is no injustice that would result from enforcing the protections of the corporate form in the present case. Also, the agreement between the plaintiffs and the defendants of their predecessors do not refer to Fuchs, except for the covenant not to sue in the Brown Solo Rider and the signature pages of all agreement where he signs merely as an agent for the various corporate entities. An agent who signs an agreement on behalf of a disclosed principal will not be individually bound to the terms of the agreement "unless there is clear and explicit evidence of the agent's intention to substitute or superadd his personal liability for, or to, that of his principal." Plaintiffs make no such allegation that Fuchs signed in his personal capacity and, indeed, they cannot. Thus, all of the causes of actions against Fuchs should be dismissed because plaintiffs have failed to plead the facts necessary to make out a veil-piercing theory against him and because there is no basis to hold him personally liable for this breach of contract action.
Finally, the remaining breach of contract claim should be removed to the Small Claims Court pursuant to CPLR 325(d). The record now establishes that the potential liability for that action is, at most, approximately $515. According to the plain meaning of paragraph 11.05 of the 1985 Agreement, plaintiffs' action may only seek two years of damages from the date of Lockett Action was filed. Moreover, plaintiffs' agreements (other than the Brown Songwriter Agreement), do not provide that plaintiffs receive royalty income from licensing to third parties, such as synchronization licenses. Accordingly, the amount of money owed to Mandes is arguably as low as $60. Thus, removal of this claim is appropriate because the Small Claims Court "would have had jurisdiction but for the amount of damages demanded" by plaintiffs.
This Court should convert this motion to one for summary judgment because plaintiffs have had the evidence submitted on this motion since before this motion was fled and, indeed, much of it was produced well before the Complaint was filed. Plaintiffs cannot provide any admissible evidence to rebut defendants' showing that this case should be removed to the Small Claims Part. There are no unreported license fees or material misstatements in the figures that form the basis of defendants' motion to remove this case to the Small Claims Part. Plaintiffs cannot argue that they are excused from rebutting defendants' strong factual showing because royalty information is solely in defendants' possession; plaintiffs' case is centered on the premise that defendants distributed and licensed recordings of plaintiffs' performances and compositions but failed to account and pay royalties to plaintiffs for such exploitation. Such distribution is public information ( e.g., on television, for sale online, etc.), and plaintiffs' representatives should be made to proffer evidence that defendants have provided materially false or inaccurate.
Even if the Court presumes all facts pleaded to be true, plaintiffs' "allegations consisting of bare legal conclusions, as well as factual claims inherently incredible or flatly contradicted by documentary evidence are not entitled to such consideration." Moreover, under the standard for summary judgment, plaintiffs may not merely claim that the license and sales data proffered by defendants is incomplete or inaccurate. Plaintiffs cannot rebut the license and sales data that defendants have provided because it is accurate and essentially complete.
In opposition to dismissal of the rescission and unjust enrichment claims, plaintiffs argue that they are entitled to plead these alternative theories of liability. As to the claim for rescission of the Brown Songwriter Agreement and Brown Solo Rider, Brown was never accounted to or paid royalties for any compositions that were his sole work product pursuant to the Brown Songwriter Agreement, as amended. Additionally, Fuchs fails to prove that Brown ever received checks detailed in the Quick Book printouts prepared by the Tuff Entities; the printouts do not. delineate what the alleged payment was for and Brown does not recall receiving any payments from Fuchs in 2000 or 2001. As to the Brown Solo Rider, although Tuff Entities have some evidence that advances were paid to Brown under the Brown Solo Rider, defendants still failed to account for and pay royalties pursuant to same. Further, plaintiffs are entitled to rescind the 1982 Agreement, as there is no evidence that the Tuff Entities paid them royalties for "Punk Rock Rap." Although Fuchs includes with his affidavit a number of payments received by "Adrian Harris" for royalties, Fuchs failed to demonstrate that any other Cold Crush Brothers member received equivalent payments and plaintiffs never received Cold Crush Brother royalty payments from "Adrian Harris"
As to the unjust enrichment claim, because the Tuff Entities failed to account to Brown for his publisher royalties under the 1985 Agreement, and have retained Brown's publisher income, all of these monies must be remitted to Brown. Further, under the 1983 Agreement, the Tuff Entities are not entitled to any mechanical royalties derived from licenses issued for uses outside of the USA and Canada. Thus, any monies Tuff City retained for these uses must be remitted to the Cold Crush Brothers.
As to their accounting claims, it is argued that defendants' belated tender of royalty reports during litigation cannot vitiate their failure to account to plaintiffs. Paragraphs 11.03 and 11,05 simply provide that once plaintiffs have received a royalty statement, they have two years in which to examine the books and records regarding same, Thereafter, plaintiffs have two years to assert any objections and to subsequently commence suit. However here, these sections have no bearing since defendants did not tender accountings to plaintiffs within the applicable period; one cannot assert objections to a report that has not been tendered, Nor is there any language limiting plaintiffs' recovery of royalties to two years; the only limitation included therein occurs when after timely receipt of the reports, plaintiffs fail to assert objections and file an action within two years of receipt of the reports. Further, plaintiffs' accounting claims are properly pleaded, Defendants have not provided plaintiffs with any information until after litigation was commenced. And, plaintiffs are not seeking an equitable accounting, which is based on a fiduciary relationship, but an accounting based on a contractual right. Furthermore, the royalty information provided by defendants is incomplete, and contains inaccurate and inconsistent information.
further, plaintiffs argue that Brown did not release defendants from any liability, The Non-Participation Clause does not identify any claims, present or future, for which Brown could abandon his right to sue the defendants. This Clause does not contain any labels or titles that identify the language as being a covenant not to sue, such as "release." Thus, the requirement of an explicit, unmistakable and equivocal statement by Brown that he intended to abandon his right to prosecute a present or future claim against the defendants is not met. If anything, this Clause addresses the procedure upon which Brown can assert his rights. Also, the Clause is merely a portion of Brown Solo Rider that purports to create a solo recording agreement, but fails to contain any language indicating an ongoing responsibility that exists in perpetuity. Instead, the Rider states that it has two separate option periods of one year each, and the agreement was most recently extended for one year. Thus, the term of the Brown Solo Rider, and the enforceability of any contractual obligations not existing in perpetuity, such as the Non-Participation Clause, expired no later than September 10, 1992, Nor does the Clause reference any consideration given in exchange for Brown's alleged promise not to join the members of The Cold Crush Brothers in filing suit against the defendants; without consideration, the Clause cannot stand as a separate agreement, that survives the Brown Solo Rider, Further, the Brown Solo Rider referred to a specific ongoing contractual dispute between The Cold Crush Brothers and defendants at the lime Brown signed it. Thus, the Clause functions as a release, and not a bar to future claims. And, the last paragraph of the Heartbreakers Agreement signed by Brown two months after he signed the Brown Solo Rider granted The Cold Crush Brothers including Brown a right to sue the defendants for ongoing disputes regarding royalties, and vitiates any enforceable promise created in the Non-Participation Clause. In the event the Court finds this Clause enforceable, it only precludes Brown and Mandes from remaining joined. Thus, defendants would only be entitled to severance of all of Brown's claims, which was not requested.
As to plaintiffs' claim to pierce the corporate veil, defendants' motion is akin to a motion to reargue, which is time-barred. On May 20, 1999, the Court issued a ruling denying Fuchs's individual request to dismiss plaintiffs' corporate veil claims, and Fuchs had until July 6, 2009 to reargue his motion. This motion, served on December 18, 2009, is therefore untimely. Further, the deposition of Fuchs is outstanding, defendants have only produced scant documents in response to plaintiffs' demands, and a preliminary conference has not been held in this case.
As to the request to remove Maudes' breach of contract claim to Small Claims Court, this Court denied such request on September 21, 2009. As the Tuff Entities had until November 6, 2009 to move to reargue, and this instant motion was not served until December 18, 2009, this instant request is untimely. Nor have the Tuff Entities met their burden on a motion to renew their motion. Although the doctrine of law of the case, which applies herein, may be ignored where there is a change in law or showing of new evidence, the Tuff Entities have failed to demonstrate either exists. In any event, numerous questions of fact exist as to the amount of monies due, and the Supreme Court has no threshold minimum monetary amount.
In reply, defendants aver that the factual disputes created by plaintiffs are either admitted by defendants or irrelevant. The parties have briefed and argued relevant caselaw, thereby charting a summary judgment course. Thus, the Court should convert defendants' motion to one for summary judgment and grant defendants relief.
Defendants add that plaintiffs' contention that Brown's promise not to sue is unenforceable because it expresses no "claims, future or present" or has no heading denoting as such, are meritless. Likewise is plaintiffs' claim that Brown's promise does not survive in perpetuity, as the Brown Solo Rider "adopts" the previous agreements, and actually contains royalty provisions, thus making the promise survive beyond the term. Thus, the Brown Solo Rider should be read in the same manner as any other recording agreement. Nor does the caselaw cited by plaintiffs support their claim that there was no separate consideration given to Brown in exchange for his covenant not to sue. The language of the Non-Participation Clause clearly indicates that it is not merely a release of a current claim.
Further, rescission is only available where the failure to pay royalties is "total" and here, the evidence shows that royalties were paid.
And, defendants' royally accountings are accurate and complete. Each accounting covered a different time period and a different set of uses. The first accounting provided in July 2009 was for physical sales only, and dated back six years from the commencement of the Locket Action. The accounting provided in November 2009 was for all third-party licensing information in defendants' possession and control. Certain third party licensees had not rendered royalty statements to Tuff City as requested. When received, these royalty statements will not be material to this dispute because it will only confirm that most of the licenses are unrecouped, and even if some have been recouped, the income stream will not be material to this case, The accounting provided in December 2009 is different from the previous accountings because Tuff City only provided data from two years prior to the commencement of the Lockett Action, in accordance with the plain language of the plaintiffs' agreements, Additionally, defendants concede that Brown is a co-publisher entitled to 50% of the publisher's share of royalties. Defendants arc also entitled to a 10% administration the with respect to Brown's publishing royalties. Thus, revised accountings for Brown based on the co-publishing language in the Brown Publishing Agreement has been provided. Defendants also provided a revised accounting for Brown concerning his third party licenses; assuming Brown is entitled to all third party licensing revenue, the additional amount due Brown would be $65.63. Further, paragraph 9.06 of the 1983 Agreement specifically authorizes Tuff City to issue foreign third party licenses at a 50% rate. Even assuming as true plaintiffs' claim that they are entitled to 100% of foreign mechanical royalties, Brown would be due $99.06 and Mandes would be due $78.39. A revised accounting giving plaintiffs 100% of foreign mechanical licenses was also provided. Giving plaintiffs the benefit of the doubt on all other claims, the total additional amount that would be owed to both plaintiffs is $338.95, and the 1983 Agreement limits damages to two years; thus, the action should be removed to Small Claims Court.
As plaintiffs admit that this action for an accounting is one in at law and not in equity, and plaintiffs seek money damages in their breach of contract claim. The accounting regarding potential damages has already been provided, defendants gave plaintiffs six years of information. Thus, no accounting cause of action is necessary because the only thing sought is a damages calculation. No useful purpose would be served by treating plaintiffs' accounting claim as an additional, duplicative action at law.
Finally, despite plaintiffs' claim that Fuchs's motion to dismiss the Lockett Action precludes Fuchs from moving to dismiss this Complaint, plaintiffs failed to properly plead facts necessary to pierce the corporate veil, especially for such a small amount. And, defendants' did not previously seek removal pursuant to CPLR 325(d); the Court declined to remove this action pursuant to CPLR 325(a), an entirely different provision.
Discussion
Pursuant to CPLR 3211(a)(1), a party may move for judgment dismissing one or more causes of action asserted against him on the ground that "a defense is founded upon documentary evidence." Thus, where the "documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law," dismissal is warranted ( Leon v Martinez, 84 NY2d 83, 88, 614 NYS2d 972 [ 1994]). The test on a CPLR 3211(a)(1) motion is whether the documentary evidence submitted "conclusively establishes a defense to the asserted claims as a matter of law" ( Scott v Bell Atlantic Corp., 282 AD2d 180, 726 NYS2d 60 [1st Dept 2001] citing Leon v Martinez, 84 NY2d 83, 88, supra; IMO Indus., Inc. v Anderson Kill Click, P.C., 267 AD2d 10, 11, 699 NYS2d 43 [1st Dept 1999]). Where a written agreement unambiguously contradicts the allegations of a breach of contract cause of action, the contract itself constitutes documentary evidence warranting dismissal of the complaint, pursuant to CPLR 3211(a)(1), regardless of any extrinsic evidence or self-serving allegations offered by the plaintiff ( Prichard v 164 Ludlow Corp., 14 Misc 3d 1202, 831 NYS2d 362 [Sup Ct New York County 2006] citing 150 Broadway N. Y. Assoc, L.P. v Bodner, 14 AD3d 1 [1st Dept 2004]). However, affidavits and deposition transcripts do not qualify as "documentary evidence" for purposes of this rule ( see Williamson, Picket, Gross v Hirschfeld, 92 AD2d 289, 290 [1st Dept 1983] (stating that affidavits do not qualify as "documentary evidence" for purposes of this rule); Realty Investors v Bhaidaswala, 254 AD2d 603, 679 NYS2d 179 [3d Dept 1988] (rejecting use of reply affidavit to support a motion to dismiss based on documentary evidence), Kearins v Gruberg, McKay Stone, 2 Misc 3d 1001, 2004 WL 316521 [Supreme Court Bronx County 2004]).
In determining a motion to dismiss pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the Court's role is ordinarily limited to determining whether the complaint states a cause of action ( Frank v Daimler Chrysler Corp., 292 AD2d 118, 741 NYS2d 9 [1st Dept 2002]). The standard on a motion to dismiss a pleading for failure to state a cause of action is not whether the party has artfully drafted the pleading, but whether deeming the pleading to allege whatever can be reasonably implied from its statements, a cause of action can be sustained ( sec Stendig, Inc. v Thorn Rock Realty Co., 163 AD2d 46 [1st Dept 1990]; Leviton Manufacturing Co., Inc. v Blumberg, 242 AD2d 205, 660 NYS2d 726 [1st Dept 1997] [on a motion for dismissal for failure to slate a cause of action, the court must accept factual allegations as true]). When considering a motion to dismiss for failure to state a cause of action, the pleadings must be liberally construed ( see, CPLR 3026). On a motion to dismiss made pursuant to CPLR 3211, the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit into any cognizable legal theory" ( Nonnon v City of New York, 9 NY3d 825; Leon v Martinez, 84 NY2d 83, 87-88, 614 NYS2d 972). However, in those circumstances where the bare legal conclusions and factual allegations are "flatly contradicted by documentary evidence," they are not presumed to be true or accorded every favorable inference ( Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81, 692 NYS2d 304 [1st Dept 1999], affd 94 NY2d 659, 709 NYS2d 861; Kliebert v McKoan, 228 AD2d 232, 643 NYS2d 114 [1 st Dept], Iv denied 89 NY2d 802, 653 NYS2d 279, and the criterion becomes "whether the proponent of the pleading has a cause of action, not whether he has stated one" ( Guggenheimer v Ginzburg, 43 NY2d 268, 275, 401 NYS2d 182; see also Leon v Martinez, 84 NY2d 83, 88, 614 NYS2d 972; Ark Bryant Park Corp. v Bryant Park Restoration Corp., 285 AD2d 143, 150, 730 NYS2d 48 [1st Dept 2001]).
On a motion to dismiss for failure to state a cause of action pursuant to CPLR 3211(a)(7), where the parties have submitted evidentiary material, including affidavits, the pertinent issue is whether claimant has a cause of action, not whether one has been stated in the complaint ( see Guggenheimer v Ginzburg, 43 NY2d 268, 275; R.H. Sanbar Projects, Inc. v Gruzen Partnership, 148 AD2d 316, 538 NYS2d 532 [1st Dept 1989]).
Under CPLR 3211, where a party submits evidence that could properly be considered on a motion for summary judgment, the court, "after adequate notice to the parties, may treat the motion as a motion for summary judgment." Additionally, the Court may convert a motion to dismiss into one for summary judgment where parties revealed their proof and, in so doing, clearly charted summary judgment course ( Mic. Property and Cos. Ins. Corp. v Custom Craftsman of Brooklyn, 269 AD2d 333, 703 NYS2d 179 [1st Dept 2000]).
Dismissal of Plaintiffs' Rescission Claim
In order to justify the remedy of rescission, "a party must allege fraud in the inducement of the contract; failure of consideration; an inability to perform the contract after it is made; or a breach in the contract which substantially defeats the purpose thereof" ( New Paradigm Software Corp. v New Era of Networks, Inc., 107 F Supp 2d 325 [SDNY 2000] (holding that since plaintiff received approximately two-thirds of the agreed upon consideration, rescission is not appropriate)). Plaintiff does not allege that defendants fraud in the inducement of the contract; failure of consideration; an inability to perform the contract after it is made
In Nolan v Sam Fox Publishing Co. ( 499 F 2d 1394 [2d Cir 1974]), a composer sought rescission of the assignment of copyright on a song because defendant failed to pay 74% of royalties owed. The Court stated that: "rescission has been allowed . . . in cases in which a publisher has made none of the royalty payments." However, because the defendant "did pay 26% of the royalties due, distinguish[ing] this case from cases where there was total failure to pay the required royalties," the Court denied rescission.
Likewise, in Cafferty v Scotti Bros. Records, Inc. ( 969 F Supp 193 [SDNY 1997]), defendant failed to pay royalties to plaintiff for three years. However, the Court denied plaintiff's request for rescission because there had been partial payment, explaining, "[t]he law is clear . . . that rescission is not an appropriate remedy in this case" ( Id. at 205).
Here, defendants claim that Cold Crush Brothers and Brown as a solo artist were paid royalty advances and income pursuant to the agreements at issue. Defendants submit records indicating royalties and fees paid from 1995 though 2000. Although plaintiffs claim that they never received any royalty fees for the six-year period prior to the commencement of the original Lockett Action, and there is no proof that advances were actually paid for this particular period, the record indicates that partial payments in royalties were partially made under the parties' agreements for other periods. Here, plaintiffs' claim that there was an alleged total failure to pay royalties, and thus, dismissal of the rescission claim is unwarranted.
In any event, the language of paragraph 1 1.05 limits plaintiffs to seek recovery for royalties. Such paragraph provides that the scope of any action concerning royalty accountings "will be limited to determination of the amount of the royalties due" and "the court will have no authority to consider any other issues or award any relief except recovery of any royalties found owing." Paragraph 11.05 expressly states the "recovery of royalties will be the sole remedy available" and that "neither you nor the Artist will have any right to seek termination of this agreement. . . ." Courts must construe a contract in a manner that avoids inconsistencies and reasonably harmonizes its terms ( James v Jamie Towers Housing Co., 294 AD2d 268, 743 NYS2d 85 [1st Dept 2002]; Barrow v Lawrence United Corp., 146 AD2d 15, 18, 538 NYS2d 363 [3rd Dept 1989]), remaining "consistent[ ] with the over-all manifest purpose of the . . . agreement." The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent ( see Slatt v Slatt, 64 NY2d 966, 967, 488 NYS2d 645, rearg denied 65 NY2d 785, 492 NYS2d 1026). "The best evidence of what parties to a written agreement intend is what they say in their writing" ( Slamow v Del Col, 79 NY2d 1016, 1018, 584 NYS2d 424). Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms ( see e.g. R/S Assoc. v New York Job Dev. Auth., 98 NY2d 29, 32, 744 NYS2d 358, rearg denied 98 NY2d 693, 747 NYS2d 411; W. W. W. Assoc. v Giancontieri, 77 NY2d 157, 162, 565 NYS2d 440).
Furthermore, a contract is unambiguous if the language it uses has "a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion" ( Breed v Insurance Co. of N. Am., 46 NY2d 351, 355, 413 NYS2d 352, rearg denied 46 NY2d 940, 415 NYS2d 1027 [ 1979]). Thus, if the agreement on its face is reasonably susceptible of only one meaning, a court is not free to alter the contract to reflect its personal notions of fairness and equity ( see e.g. Teichman v Community Hosp. of W. Suffolk, 87 NY2d 514, 520, 640 NYS2d 472 [19961; First Natl Stores Yellowstone Shopping Ctr., 21 NY2d 630, 638, 290 NYS2d 721, rearg denied 22 NY2d 827, 292 NYS2d 1031). Ultimately, the aim is a practical interpretation of the language employed so that there be a realization of the parties' "reasonable expectations" ( see Sutton v East River Sav. Bank, 55 NY2d 550, 555, 450 NYS2d 460).
The plain language of paragraph 11.05 clearly and unambiguously precludes plaintiffs from pursuing a claim for rescission, or termination of the agreement, and limits plaintiffs to a claim for nonpayment of royalties. It is noted that "rescission is an equitable remedy which will not be granted unless [p]laintiffs lack an adequate remedy at law" {New Paradigm Software Corp.). Here, plaintiffs' seek the recovery of royalties and fees under their claims for breach of contract, as permitted under paragraph 11.05. Therefore, although plaintiffs state a claim for rescission, the documentary evidence establishes that the rescission is barred. Accordingly, plaintiffs' rescission claim is dismissed.
Dismissal of Unjust Enrichment Claim
To establish a claim for unjust enrichment, a plaintiff must establish that he/she performed services for the defendant which resulted in the defendant being unjustly enriched ( Hamlet on Olde Oyster Bay Home Owners Ass'n, Inc. v Holiday Org., Inc., 12 Misc 3d 1182 [2006J, citing Clark v Daby, 300 AD2d 732, 751 NYS2d 622 [3d Dept 2002] and Kagan v K-Tel Entertainment, Inc., 172 AD2d 375, 568 NYS2d 756 [1st Dept 1991]). However, unjust enrichment is not available to obtain amounts allegedly due under a contract ( see Bates Advertising USA, Inc. v McGregor, 282 F Supp2d 209 [SONY 2003]).
Plaintiffs' claim for unjust enrichment premised upon the Tuff Entities' failure to account to Brown for his publisher royalties under the 1985 Agreement, and the failure to pay Brown's publisher income, which clearly arise from the 1985 Agreement. Further, despite plaintiffs claim that the Tuff Entities are not entitled to any mechanical royalties derived from licenses issued for uses outside of the USA and Canada under the 1983 Agreement, paragraph 9.06 of (he said Agreement expressly permits Tuff City to issue foreign third party licenses at a 50% rate "The existence of a valid and enforceable written contract governing a particular subject matter precludes recovery in quasi-contract for events arising out of the same subject matter ( PKO Television, Ltd. v Time Life. Films, Inc., 169 AD2d 582, 564 NYS2d 434 [1st Dept 1991] citing Clark-Fitzpatrick, Inc., v Long Island Railroad Co., 70 NY2d 382, 521 NYS2d 653). Therefore, since plaintiffs' claim for unjust enrichment arises out of the parlies' Agreements at issue, the unjust enrichment is dismissed pursuant to CPLR 3211(a)(1) as duplicative of plaintiffs' breach of contract claims.
Section 9.06 provides:
In respect of Phonograph Records derived from Master Recordings leased or other furnished by Tuff City's Licensees to others for their manufacture and distribution of Records outside the United Status, Tuff City will pay you one-half of the amount which would be payable to you if Tuff City of its licensees manufactured such Records.
Dismissal of Accounting Claim
Pursuant to paragraph 1 1.03, Tuff City was obligated to maintain books and records and report the sales for which royalties are payable to plaintiffs. Plaintiffs, were then permitted to examine those books and records to verify the accuracy of the statements "sent to you under paragraph 11.01" and such examination could be made "only once, and only within two years after the date when Tuff City is required to send you that statement under paragraph 11.01."
According to plaintiffs and plaintiffs' business representative, Jay L. Berger, no payments or artist/publisher/songwriter royalty accounting reports for Brown's solo works, or for Mandes's work as part of Cold Crush Brothers, were made to plaintiffs from 2004 through 2008. However, defendants provided accounting statements to plaintiffs on three occasions, albeit, during the pendency of this litigation, Since defendants did not provide plaintiffs with royalty statements until July 2009, November 2009, and December 2009, plaintiffs' two-year period within which to examine the books and records concerning the amounts reported therein did not trigger until July 2009, November 2009, and December 2009. Although paragraph 11.05 requires that plaintiffs object to any royalty statement "within two years after the date when Tuff City is required to send you that statement" and also precludes plaintiffs from commencing suit against Tuff City in connection with any royalty accounting or for royalties on records sold during the period a royalty accounting covers unless such suit is commenced within that two-year period, the two-year period within which to commence such a suit does not trigger until "Tuff City" sends plaintiffs the statements, which occurred in July 2009, November 2009, and December 2009. It is only when plaintiffs fail to commence such an action within two years of defendants' submission of the royally statements, that such royalty statements become binding upon plaintiffs. Since plaintiffs did not receive royalty statements until 2009, it cannot be said that plaintiffs' claim for royalties are limited to two years.
As to the "first" royalty accounting (attached to Fuch's July 27, 2009 affidavit) for The Cold Crush Brothers and Brown for six years of record sales, such accounting does not include the artist royalty rate, songwriter royalty rate, or publisher share; nor does it include any sales from third parties (licensees of the Tuff Entities). The "second" set of royalty accounting reports, tendered during the parties' settlement negotiations, reflected amounts different from what was reported in Fuch's Affidavit. Finally, the "third" set of royalty accounting reports (attached to Brian Levinson's affidavit regarding the instant motion) fails to account for Brown's publishing interest as set forth in the Brown Songwriter Contract. Defendants concede, in reply, that such Contract identities Brown as a co-publisher, and that Brown is entitled to his publisher share. Further, Mandes is arguably a publisher entitled to issue licenses in countries outside the USA and Canada, and to the extent the calculation does not include Maudes' 100% of foreign license fees, the calculation is inaccurate. With respect to third party licensing, the 1983 Cold Crush Brothers Contract provides that "Tuff City will pay you 50% of Tuff City's net receipts from its licensee . . ." and reports sent to Brown and The Cold Crush Brothers in 2001 and 2003 included third party license income. Arguably, not only is the Cold Crush Brothers entitled to 50% of net moneys received by the Tuff Entities for third party licensing, but Brown is likewise entitled to third party licensing royalties since the Brown Solo Rider "hereby adopt[s]" the 1983 Cold Crush Brothers Contract.
However, although the statements arc arguably inconsistent and inaccurate, defendants did perform an accounting and provided plaintiffs with royalty statements. Whether the amounts due and owing are accurately reflected, resulting in additional monies owed has no bearing on whether defendants owe plaintiffs an accounting. Instead, any discrepancies in the accounts resulting in monies due plaintiffs can be recovered by plaintiff under their breach of contract claims. Therefore, as the parties have submitted affidavits, legal arguments, and caselaw pertaining to the merits of plaintiffs' accounting claim, such claim is dismissed pursuant to CPLR 3211(c).
Further, since paragraph 11.05 limits plaintiffs to an action for royalties, and the purpose of the accounting is essentially to determine the amount of any royalties due and owing plaintiffs, a separate cause of action for an accounting cannot lie. Therefore, the accounting claim is dismissed as moot and unwarranted.
Dismissal of Brown's Claims
As to defendants' claim that Brown promised "not to sue" defendants, paragraph 9 of the Brown Solo Rider states:
Artist warrants and represents that he will not participate, directly or indirectly, in any actions or suits brought by The Cold Crush Brothers against Tuff City or Aaron Fuchs.
Covenants not sue or "agreements purporting to release another from the consequences of his own wrong will not be so construed unless the document is unequivocal and clear in its language and construction" ( Cotton v New York Hosp., 53 AD2d 588, 385 NYS2d 65 [1st Dept 1976]). "Such contracts are not favored since they purport to relieve persons from results flowing from their own negligent and improper conduct" and such agreements "will be closely scrutinized and strictly construed" ( id.)
Applying these construction principles along with basis contract principles noted above. the plain language of this paragraph provides that in the event The Cold Crush Brothers brings an action against Tuff City or Aaron Fuchs, Brown is precluded from "participating" in any such action. Plaintiffs herein sue as members of The Cold Crush Brothers, and the subject agreements involve The Cold Crush Brothers. Thus, to the extent "The Cold Crush Brothers" is a plaintiff in this action against Tuff City and Fuchs, Brown is precluded from participating in this action. However, since this paragraph docs not operate as a release of all present or future claims, Brown is not precluded from bringing suit against defendants in a separate action, in his individual capacity.
Therefore, defendants' motion to dismiss Brown's claims is denied, and Brown's claims brought in his individual capacity are hereby severed to permit Brown to purchase a no-fee index number for his severed claims.
Dismissal of Plaintiffs' Claim Against Fuchs to Pierce the Corporate Veil
In the Lockett Action, Fuchs moved pursuant to CPLR $3211(a)(1) and (a)(7) to dismiss the plaintiffs' Complaint for failure to state a cause of action and upon the ground that there is a defense based on documentary evidence, Fuchs argued that plaintiffs failed to plead facts sufficient to pierce the corporate veil of the Tuff Entities. By decision and order of the Court dated May 20, 2009 in the Lockett Action, this Court held the following:
Accepting the allegations in the Complaint as true, as this Court must, it appears that plaintiffs have alleged a cognizable claim for piercing the corporate veil as to defendant Fuchs and the Tuff Entities. Here, plaintiffs alleged that defendant Fuchs (I) is the. sole owner of the Tuff Entities. (ii) personally controls and dominates the Tuff Entities, (iii) has not observed the. corporate formalities of the Tuff Entities, and (iv) that Fuchs is, as an individual, so intertwined with the actions of the Tuff Entities that the action and conduct of said entities should be deemed that of Fuchs, rendering him personally liable for the same. Brown's affidavit indicates that defendant Fuchs also makes all decisions. It is also alleged that defendant Fuchs's domination has caused plaintiffs to suffer damages. Such allegations are sufficient, at this juncture, to permit plaintiffs to assert a claim against defendant Fuchs under the theory of piercing the corporate veil.
Further, plaintiffs have served discovery demands for information pertaining to whether defendant Fuchs commingled the Tuff Entities' assets and business activities with his own assets, whether the Tuff Entities were undercapitalized, and whether the Tuff Entities disregarded the required corporate formalities. Thus, at the very least, plaintiffs are entitled to obtain the necessary discovery to ascertain whether farther factors exist to support piercing the corporate veil. . . . Therefore, the motion by defendant Fuchs to dismiss the Complaint for failure to state a claim to pierce the corporate veil is denied. (Internal citations omitted) (Emphasis added).
Defendants' motion to dismiss the corporate veil claim against Fuchs is essentially a motion to reargue. A motion to renew, when properly made, posits newly discovered facts that were not previously available or a sufficient explanation is made why they could not have been offered to the Court originally (see discussion in Alpert v Wolf 194 Misc 2d at 133, 751 NYS2d 707; D. Siegel New York Practice § 254 [3rd ed. 1999]). Since defendants' motion contains no new evidence or facts pertaining to plaintiffs' corporate veil claim, such motion cannot be deemed as one for renewal, but for reargument. Further, while a motion for renewal may be based upon law not previously considered ( Prude v County of Erie, 47 AD2d 111, 113-114, 364 NYS2d 643) where the excuse for neglecting in the first instance to raise the statute was valid ( Johnston v National Railroad Passenger Corp., 161 AD2d 288 [1st Dept 1990]), defendants failed to alert the Court to any law not previously considered.
A motion for leave to reargue under CPLR 2221, "is addressed to the sound discretion of the court and may be granted only upon a showing 'that the court overlooked or misapprehended the facts or the law or for some reason mistakenly arrived at its earlier decision'" ( William P. Pahl Equipment Corp. v Kassis, 182 AD2d 22 [1st Dept] lv. denied and dismissed 80 NY2d 1005, 592 NYS2d 665, rearg. denied 81 NY2d 782, 594 NYS2d 714). Reargument is not designed to afford the unsuccessful party successive opportunities to reargue issues previously decided ( Pro Brokerage v Home Ins. Co., 99 AD2d 971, 472 NYS2d 661) or to present arguments different from those originally asserted ( Foley v Roche, 68 AD2d 558, 41 8 NYS2d 588; William P. Pahl Equipment Corp. v Kassis, supra). On reargument the court's attention must be drawn to any controlling fact or applicable principle of law which was misconstrued or overlooked ( see Macklowe v Browning School, 80 AD2d 790, 437 NYS2d 11 [1st Dept 1981]).
Defendants failed to demonstrate that the Court overlooked or misapprehended the facts or the law in its earlier determination. Nor are there any new facts alleged in this motion pertaining to this claim; indeed, the deposition of Fuchs has yet to be conducted, Therefore, there is no basis for reargument, or for this Court to reconsider or deviate from its earlier determination to sustain plaintiffs' claim to pierce the corporate veil. The Court notes that although defendants argue that plaintiffs have not plead any legitimate reason to pierce the corporate veil, as stated in this Court's earlier decision (which has not been appealed, renewed, or timely reargued by defendants), plaintiffs' complaint states the elements necessary to pursue this claim against Fuchs. Further, that the damages at issue arc arguably "so small," as defendants contend, is no reason to dismiss the claim to pierce the corporate veil, and defendants provide no authority to support this position. As such, dismissal of plaintiffs' claim to pierce the corporate veil is denied.
Removal of Plaintiff Mandes's Breach of Contract Claim to Small Claims Court
In the Lockett Action, defendants sought removal of plaintiffs' claims pursuant to CPLR 325(a), and here, defendants now seek removal of such claims pursuant to CPLR 325(a). The Court's discussion in the Lockett Action, however, addressed whether removal to Small Claims Court was warranted under CPLR 325(a) given that defendants argued that the amounts sought were nominal:
Although defendants mainly argue that removal to Small Claims Court is warranted due to the nominal amount of damages allegedly suffered by plaintiffs, defendants do not cite CPLR 325(d) (Removal without consent to court of limited jurisdiction), but 325(a) which provides:
Where a mistake was made in the choice of the court in which an action is commenced, the supreme court . . . may remove the action to the proper court . . .
When the case is brought beyond the monetary jurisdiction of a court, the plaintiff may move for removal and transfer pursuant to CPLR § 325(a), or to start anew . . .
Defendants have not established that plaintiffs' causes of action were brought in this Court by mistake, and the record docs not establish that their damages fall within the jurisdictional limits of Small Claims Court . . . plaintiffs' claims fall under various written agreements . . . which possibly entitle them to royalties on third-party licensing. Notably, several plaintiffs have claims for rescission as well.
Therefore, the branch of defendants' cross-motion to sever and remove plaintiffs' causes of action to the Small Claims Part . . . pursuant to CPLR § 1002(a) and 325(a) . ., is denied.
(Emphasis added),
Although defendants did not expressly cite CPLR 325(a) in their prior motion as they do now, their arguments before the Court in the prior motion placed the issue of whether the monetary amount sought warranted removal. The arguments defendants set forth in the instant motion are substantially similar to those made in their prior motion.
However, since the Court is now presented with new information, such as the potential amount of damages due plaintiffs for third party licensing royalties and the fact that the rescission claim lacks merit, such new information, not in existence at the time of the prior motion, permits the Court to address whether removal pursuant to CPLR 325(d) is appropriate at this juncture.
Under CPLR 325(d) removal of an action to Small Claims Court may be directed where it appears that the amount of damages sustained may be less than demanded, That the calculation of royalties are arguably incorrect and docs not properly account for four additional years of sales and third party licensing, utilizes different rates, does not account for various licenses fees, and fail to account for plaintiffs' share as a publisher, plaintiff's claim for piercing the corporate veil is a form of equitable relief which Civil Court docs not have jurisdiction to entertain ( see Zinger v Service Ctr. of New York, Inc., 23 Misc 3d 142, 889 NYS2d 885 [NY Sup App Term 2009] citing 19 W. 45th St. Realty Co. v Darom Elec. Corp., 233 AD2d 184). Notably, defendants' request for removal is premised on the notion that all claims, except for the breach of contract claims, should be dismissed, and this Court has not dismissed plaintiffs' claim to pierce the corporate veil, Therefore, defendants' request for removal of the breach of contract claim to Small Claims Court of the Civil Court is denied.
Conclusion
Based on the foregoing, it is hereby
ORDERED that the branch of defendants' motion to dismiss the Complaint against Fuchs in its entirety is denied; and it is further
ORDERED that the branch of defendants' motion to dismiss all claims except for Count Five for breach of contract brought by plaintiff Carlos Mandes is granted to the extent that the cause of action for rescission is dismissed pursuant to CPLR 3211(a)(1), the cause of action for unjust enrichment is dismissed pursuant to CPLR 3211(a)(1) and the cause of action for an accounting is dismissed pursuant to CPLR 3211©, are said claims are hereby severed and dismissed accordingly; and it is further
ORDERED that the branch of defendants' motion to dismiss plaintiff Brown's claims is denied; and it is further
ORDERED that the claims by Brown are hereby severed and Brown shall file a no-fee index number for his severed claims; and it is further
ORDERED that the branch of defendants' motion to transfer the breach of contract causes of action to the Small Claims Part of the New York City Civil Court is denied; and it is further
ORDERED that defendants serve a copy of this order with notice of entry upon all parties within 20 days of entry,
This constitutes the decision and order of the Court.