Bill Diodato Photography LLC v. Avon Products, Inc.
Filing
41
OPINION re: 32 MOTION for Reconsideration re; 30 Memorandum & Opinion Pursuant to Fed. R. Civ. P. 12(b)(6) filed by Avon Products, Inc. Based on the conclusions set forth above, Defendant's motion to reconsider is granted. Upon reconsideration, Plaintiff's claim for breach of contract remains a validly pled cause of action, but Plaintiff's claims for account stated are dismissed. (Signed by Judge Robert W. Sweet on 9/21/2012) (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------x
BILL DIODATO PHOTOGRAPHY LLC,
12 Civ. 847(RWS)
Plaintiff,
OPINION
-againstAVON PRODUCTS, INC.,
Defendant.
x
A P PEA RAN C E S:
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USD{
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ELEC l '
Attorney for Plaintiff
DOC #:
DATE Fli~L.~ ..
LEBOWITZ LAW OFFICES LLC
777 Third Avenue, 35th Floor
New York, NY 10017
By: Marc Andrew Lebowitz, Esq.
Keith M. Getz, Esq.
At
':''':.
for Defendant
FROSS ZELNICK LEHRMAN & ZISSU, P.C.
866 United Nations Plaza
New York, NY 10004
By: Roger L. Zissu, Esq.
Alexander Lloyd Greenberg, Esq.
\
l
111.'\ G
Sweet, D.J.
Defendant Avon Products ("Avon" or the "Defendant
tl
)
has moved pursuant to Local Civil Rule 6.3 for reconsideration
of a portion of this Court's opinion dated August 7, 2012
denying Defendant's Rule 12(b) (6) motion to dismiss (the
"August 7 Opinion").
Specifically, Defendant contends that
the August 7 Opinion erroneously failed to dismiss the claims
for breach of contract and account stated because the Court
overlooked agreements that Defendant presented with its motion
to dismiss.
aintiff Bill Diodato Photography LLC
("Plaintiff") has opposed Defendant's motion.
Based upon the
conclusions set forth below, Defendant's motion to reconsider
is granted.
Upon review of the agreements properly before the
Court, it is determined that Plaintiff has pleaded a valid
claim for breach of contract, but plaintiff's claims for
account stated are dismissed.
Prior Proceedings
A detailed recitation of the prior proceedings and
the facts alleged in Plaintiff's complaint is provided in the
August 7 Opinion.
See Bill Diodato
1
Photogr~phy
LLC v. Avon
Prods. 1 No. 12 Civ. 847 1 2012 WL 3240428 1 at *1 2 (S.D.N.Y.
------
Aug. 71 2012).
Familiarity with those prior proceedings and
alleged facts is assumed.
On February 21 2012 1 Plaintiff filed its complaint
in the Southern District of New York alleging five causes of
action
l
contract
including (1) copyright infringement
l
1
(2) breach of
(3) account stated with respect invoices sent
between October 2004 and October 2008
1
(4) account stated with
respect to an invoice sent in September 2008 and (5)
conversion.
On April 4, 2012 1 Defendant filed a motion to
dismiss all five counts pursuant to Fed. R. Civ. P. 12(b) (6).
The August 7 Opinion granted Defendant's motion to dismiss
with respect to Plaintiff1s conversion cause of action, but
denied Defendant's motion to dismiss with respect to
Plaintiff's breach of contract and account stated causes of
action.
Decision with respect to the validity of Plaintiff's
copyright infringement cause of action was deferred pending
limited discovery on the issue of equitable tolling.
Prods., 2012 WL 3240428 1 at *12.
2
See Avon
On August 20, 2012, Defendant filed the pending
motion to reconsider.
The motion was marked fully submitted
on September 10.
The Applicable Standard
Defendant requests reconsideration of the August 7
Opinion pursuant to Local Civil Rule 6.3.
The standard
governing motions under Local Civil Rule 6.3 is the same as
that governing motions made pursuant to Fed. R. Civ. P. 59,
see Henderson v. Metro. Bank & Trust Co., 502 F. Supp. 2d 372,
375 (S.D.N.Y. 2007), and a court may grant reconsideration
where "the moving party can point to controlling decisions or
data that the court overlooked - matters, in other words, that
might reasonably be expected to alter the conclusion reached
by the court."
rd. at 376.
Additionally, the party moving
for reconsideration can obtain relief by demonstrating an
"intervening change in controlling law, the availability of
new evidence, or the need to correct a clear error or prevent
manifest injustice./I
rd.
(quotation marks and citations
omitted); Parrish v. Sollecito, 253 F. Supp. 2d 713, 715
(S.D.N.Y. 2003)
("Reconsideration may be granted to correct
clear error, prevent manifest injustice or review the court's
3
decision in light of the availability of new evidence.")
(citing Virgin Atl. Airways/ Ltd. v. Nat'l Mediation Bd./ 956
F.2d 1245
1255 (2d Cir. 1992)) i
1
ace Entm/t
.,
----------~-----~~
2001)
skill Dev.
154 F. Supp. 2d 696, 701 02
L.L.C. v. Park
(S.D.N.Y.
(granting reconsideration due to the court's erroneous
application of a statute).
The moving party must demonstrate
controlling law or factual matters put before the court on the
underlying motion that the movant believes the court
overlooked and that might reasonably be expected to alter the
court's decision.
See Linden v. Dist. Council 1707-AFSCME/
415 Fed. Appx. 337, 338-39 (2d Cir. 2011)
(affirming dismissal
of reconsideration motion as movant did not identify any
relevant facts or controlling authority that the lower court
overlooked)
i
Lichtenberg v. Besicorp Grp. Inc./ 28 Fed. Appx.
73, 75 (2d Cir. 2002)
(affirming dismissal of reconsideration
motion where movant "failed to demonstrate that the [lower]
court overlooked any fact of consequence or controlling legal
authority at the time the court decided [the case]").
The reason for the rule confining reconsideration to
matters that were "overlooked" is to "ensure the finality of
decisions and to prevent the practice of a losing party
examining a decision and then plugging the gaps of a lost
4
motion with additional matters."
Polsby v. St. Martin's
Press, Inc., No. 97 Civ. 690 (MBM) , 2000 WL 98057, at *1
(S.D.N.Y. Jan. 18, 2000)
omitted).
(citation and quotation marks
A court must narrowly construe and strictly apply
Local Civil Rule 6.3, so as to avoid duplicative rulings on
previously considered issues, and to prevent the rule from
being used as a substitute for appealing a final judgment.
See In re Bear Stearns Cos., Inc. Sec., Derivative and ERISA
Lit
., 08 M.D.L. No. 1963, 2009 WL 2168767, at *1 (S.D.N.Y.
Jul. 16, 2009)
("A motion for reconsideration is not a motion
to reargue those issues already considered when a party does
not like the way the original motion was resolved.")
(quoting
v. Polan, 496 F. Supp. 2d 387, 389 (S.D.N.Y. 2007))
Ballard v. Parkstone
i
LLC, No. 06 Civ. 13099, 2008 WL
----------------------------~~-----
4298572, at *1 (S.D.N.Y. Sept. 19, 2008)
("Local Rule 6.3 is
to be narrowly construed and strictly applied in order to
avoid repetitive arguments on issues that the court has fully
considered.")
(quoting Abrahamson v. Bd. of Educ. of the
Cent. Sch. Dist., 237 F. Supp. 2d 507! 510
(S.D.N.Y. 2002)).
Motions for reconsideration "are not
vehicles for taking a second bite at the apple,
court]
. and [the
[should] not consider facts not in the record to be
facts that the court overlooked."
5
Rafter v. Liddle, 288 Fed.
Appx. 768, 769 (2d Cir. 2008)
(citation and quotation marks
omitted) .
Defendant's Motion To Reconsider Is Granted
According to Defendant, the August 7 Opinion erred
in allowing Plaintiff's claim for breach of contract and
Plaintiff's two claims for account stated to proceed.
Defendant contends that had the August 7 Opinion analyzed the
agreements at issue in the litigation rather than rely solely
on Plaintiff's allegations in the complaint, these claims
would have been dismissed.
Because the August 7 Opinion
failed to consider agreements that were properly before the
Court at the motion to dismiss stage, Defendant's motion for
reconsideration is granted.
Defendant's motion to reconsider is based on 19
invoices Defendant submitted to the Court in connection with
its motion to dismiss.
These 19 invoices were attached to two
separate declarations.
Seven invoices were attached to a
declaration from Suzann Frobose, an Avon employee, whose
declaration stated that Plaintiff provided photography
services for Defendant's catalogs from 2001 to 2006 and that
6
the seven invoices were sent to Defendant from Plaintiff.
The
12 other invoices were attached to a declaration from
Defendant's counsel, Roger L. Zissu, Esq., who stated
his
declaration that the 12 invoices were received from
Plaintiff's counsel in March 2011.
According to Defendant,
the August 7 Opinion erred in that it relied solely on the
language Plaintiff pled in the complaint.
Defendant contends
that the 19 agreements included in Defendant's declarations
were incorporated by reference in Plaintiff's complaint and
were therefore properly before the Court on the motion to
dismiss.
Had the August 7 Opinion, rather than re
on the
language of the complaint, based its analysis on the language
in the agreements, Defendant contends that the breach of
contract claim and two account stated claims would have been
dismissed.
Defendant's motion to reconsider is granted because
the August 7 Opinion overlooked the agreements presented to
the Court and inappropriate
relied on Plaintiff's
allegations rather than the contracts' text.
It is well
settled that a court cannot consider documents outside the
pleadings on a Rule 12(b) (6) motion to dismiss unless the
documents are incorporated by reference in the complaint or
7
are integral to the complaint.
"To be incorporated by
reference, the complaint must make a clear, definite and
[and]
substantial reference to the documents
[t]
0
be
integral to a complaint, the plaintiff must have (1) actual
notice of the extraneous information and (2) relied upon the
documents in framing the complaint."
DeLuca v. AccessIT
Inc., 695 F. Supp. 2d 54, 60 (S.D.N.Y. 2010)
citations and quotation marks omitted).
(internal
As described above,
of the 19 agreements presented to the Court at the motion to
dismiss stage, 12 were invoices attached to the Zissu
Declaration that Defendant obtained from Plaintiff in March
2011.
The remaining seven agreements were invoices attached
to the Frobose Declaration, representing other invoices that
Defendant received from Plaintiff for photography services.
aintiff contends that these seven agreements are not
properly before the Court, and there is insufficient evidence
to establish that these seven agreements are either
incorporated by reference or integral to the complaint.
However, with respect to the invoices attached to the Zissu
Declaration, the parties agree that these invoices are before
the Court in the context of the motion to dismiss. 1
1
See PI.'s
Plaintiff's complaint refers expressly to the invo
plaintiff sent Defendant memorializing a limited usage license
of one year and a limited scope of use.
See Compl. ~~ 15-17.
8
Opp. Br. at 3 ("[T]he only invoices that the Court could even
consider would be those [i]nvoices attached to the Zissu
Declaration.") .
"In the event that a plaintiff alleges a claim based
on a written instrument
I
as is the case here
l
the court may
consider such an instrument in ruling on a Rule 12(b) (6)
motion even if it was not attached to the complaint and made a
Elec. HoI
part thereof[.]"
F. Supp. 2d 179
Inc. v. Falk
l
1
184 (S.D.N.Y. 2000)
861 F. Supp. 253
1
Co.
Inc.
(quoting Sazerac CO.
257 (S.D.N.Y. 1994)).
1
88
I
If the
documents contradict the allegations of a plaintiff/s
complaint! the documents control and the Court need not accept
as true the allegations in the complaint.
Id.
In its
briefing concerning the motion to dismiss! Defendant made
reference to the invoices Plaintiff sent Defendant and
attached them as exhibits to declarations submitted in support
of the briefing.
Notwithstanding these submissions! the
August 7 Opinion!s discussion of Plaintiff!s claims for breach
As such! these invoices were incorporated by reference into
Plaintiff!s complaint. These invoices are also integral to
the complaint! as Plaintiff both had actual notice of these
documents! as it was Plaintiff who provided Defendant with
these invoices in March 2011! and Plaintiff relied upon the
documents in framing the complaint! as the complaint makes
express reference to these invoices.
9
of contract and account stated focused on Plaintiff's
allegations in the complaint.
Because the August 7 Opinion
overlooked the agreements (13 of which the parties agree were
properly before the Court at the motion to dismiss stage of
the litigation), Defendant's motion to reconsider is granted.
Review Of The Agreements Reveals That Plaintiff Has Pled A
Valid Cause Of Action For Breach Of Contract
According to Defendant, the August 7 Opinion
erroneously failed to dismiss
claim.
aintiff's breach of contract
Defendant contends that the Court should have relied
on the agreements now before the Court to find that Plaintiff
failed to plead an enforceable agreement under New York law.
Defendant also contends that the Court should have followed
precedent cited by Defendant in the motion to dismiss
pleadings and held that Plaintiff's breach of contract
aim
is preempted by the Copyright Act.
1. Plaintiff Has Stated A Valid Cause Of Action
For Breach Of Contract
As was noted in the August 7 Opinion,
" [u]nder New
York law, an action for breach of contract requires proof of
(1) a contract;
(2) the performance
10
the contract by one
party;
(3) breach by the other party; and (4) damages."
Investors
Mut. Ins. Co., 152 F.3d 162, 168
(2d Cir. 1998)
omitted).
First
(citations an internal quotation marks
Upon consideration of both
aintiff's allegations
as well as the documents before the Court at the motion to
dismiss stage, Plaintiff has presented sufficient facts to
establish a valid breach of contract claim.
Plaintiff's
breach of contract cause of action states:
By reusing Diodato LLC's copyrighted images, AVON
breached the one (1) year limited usage license set for
the in the Original Invoices.
By using Diodato LLC's copyrighted images in
international catalog campaigns, AVON breached the scope
of use set forth in the Original Invoices, which limited
the scope of use to United States catalogs.
Diodato LLC has, at all times, fully performed all of its
obligations to AVON under the Original Invoices.
By virtue of AVON's breach, Diodato LLC has been damaged
in an amount to be determined at trial.
Compl. ~~ 49-52.
As such, Plaintiff's breach of contract
claim is premised on two wrongs Defendant allegedly committed
in violation of the parties' agreements:
(1) Defendant
allegedly used Plaintiff's images beyond the one-year license
term, and (2) Defendant allegedly used
outside the United States.
aintiff's images
An examination of the agreements
11
before the Court reveals that, although Plaintiff cannot state
a claim based on this second
leged wrongdoing, plaintiff can
state a breach of contract claim premised on Defendant's
failure to fulfill its obligation to negotiate with Plaintiff
prior to using Plaintiff's images beyond the one-year license
term.
With respect to the second alleged wrongdoing,
namely that Defendant violated an agreement by using
Plaintiff's photographs in catalogs outside the United States,
the agreements before the Court contain no provisions
concerning the geographic scope of the license afforded to
Defendant.
Furthermore,
aintiff's opposition to Defendant's
motion to reconsider fails to answer Defendant's contention
that there was no provision limiting Defendant's use of the
images to catalogs in the United States.
Accordingly,
Plaintiff has failed to state a valid cause of action for
breach of contract under the theory that Defendant used
Plaintiff's images in a geographic region the parties'
agreements prohibited.
However, with respect to the first alleged
wrongdoing, Plaintiff has provided a sufficient basis upon
12
which to base a breach of contract claim.
A review of the
agreements that the Court overlooked in the August 7 Opinion
reveals that the agreements between the parties provide, among
other things, that "[i]f catalog images are to be used for
longer than 1 year, a fee must be negotiated prior to use" and
that "[c]atalog use is one year only unless otherwise
negotiated[.]"
Defendant's contention is that the Court
should have relied on the agreements before the Court to hold
that there was no agreement under New York law between the
parties as to the post-license use of the photographs.
Notwithstanding Defendant's contention, the agreements before
the Court establish that Defendant, if
elected to use the
images beyond the one year licensing agreement, was obligated
to negotiate with Plaintiff to determine a fee.
negotiate a fee with
Rather than
aintiff, Defendant used Plaintiff's
images without permission.
As such, Plaintiff's complaint
presents a valid cause of action
breach of contract.
Defendant rejects this contract theory, contending
that the language quoted above is an unenforceable "agreement
to agree."
"[A] mere agreement to agree, in which a mat
term is left for future negotiations, is unenforceable."
Joseph Martin, Jr., Delicatessen, Inc. v. Schumacher, 52
13
al
N.Y.2d lOS, 109, 436 N.Y.S.2d 247, 417 N.E.2d
tation omitted).
1
(1981)
Defendant adopts the position that,
because the agreements before the Court only require that the
fee for use beyond the one-year license term be "negotiated,"
the contract is without the material terms necessary to be
enforceable.
"To create a binding contract, there must be a
manifestation of mutual assent sufficiently definite to assure
that the parties are truly in agreement with respect to all
material terms."
Express Indus. & Terminal Corp. v. N.Y.
State Dep't_of Transp., 93 N.Y.2d 584, 589, 693 N.Y.S.2d 857,
715 N.E.2d 1050 (1999)
(citation omitted).
There must be "an
objective meeting of the minds sufficient to give rise to a
binding and enforceable contract."
Id.
Reviewing the
agreements before the Court reveals that the parties' intended
the license term to be one year, and there is a clear
expression that, if Defendant wished to use the images
following that one-year period, the parties would be obligated
to negotiate a fee to be paid to Plaintiff prior to
Defendant's continued use of the images.
The agreements
Defendant cites contain no information suggesting that the
parties' did not have the intent to form a contract, as the
agreements provide Plaintiff with a fee, Defendant with a oneyear license to use
aintiff's images and various conditions
14
under which that license is granted, including the obligation
to negotiate a fee to be paid to Plaintiff prior to
Defendant's use of the images beyond the one-year period.
such, reviewing the agreements reveals that
As
aintiff has
presented a valid breach of contract claim on the theory that
to fulfill his obligation to negotiate with
Defendant fail
Plaintiff prior to using the images beyond the one-year term.
2. Plaintiff's Breach Of Contract Claim Is Not
Preempted By The Copyright Claim
As was noted in the August 7 Opinion
Act provides for
l
the Copyright
preemption of state law claims that are
interrelated with copyright claims.
exclusively governs a claim when:
"The Copyright Act
(1) the particular work to
which the claim is being applied falls within
works protected by the Copyright Act .
type of
. and (2) the claim
seeks to vindicate legal or equitable rights that are
equivalent to one of the bundle of exclusive rights already
protected by copyright law[.]n
Phoenix Pictures
l
ch Ltd.
L.P. v.
Inc., 373 F.3d 296, 305 (2d Cir. 2004).
The
first requirement "is satisfied if the claim applies to a work
of authorship fixed in a tangible medium of expression and
falling within the ambit of one of the categor
15
s of
copyrightable works."
rd.
Because this case involves
photographs, that requirement has been satisfied here.
The
second requirement "is satisfied only when the state-created
right may be abridged by an act that would, by itself,
the exclusive rights provided by federal
infringe one
copyright law."
Id.
er Assocs. Int'l
(citing
Altai, Inc., 982 F.2d 693, 716 (2d Cir. 1992)).
Inc. v.
That is,
(1)
"the state law claim must involve acts of reproduction,
adaption, performance, distribution or display"; and (2)
"the
state law claim must not include any extra elements that make
it qualitatively different from a copyright infringement
aim."
Bri
ch Ltd., 373 F.3d at 305 (citations omitted)
----~~---------
With respect to the "extra element" requirement, courts
examine "what [the] plaintiff seeks to protect, the theories
in which the matter is thought to be protected and the rights
sought to be enforced."
Computer Assocs., 982 F.2d at 716.
Whether a breach of contract claim is preempted by a
copyright claim represents a difficult question, as " [c]ourts
this district have continued to disagree on how to analyze
preemption of breach of contract claims."
Wholesale
., 723 F. Supp. 2d 596, 614
--------------~-
~:•.~~_~~~~~_=~~~~v~.~L~u~t~v~a==k,
(S.D.N.Y. 2010).
773 F. Supp_ 2d 419, 441 445
16
In
(S.D.N.Y. 2011), the Honorable Richard J. Holwell provides a
detailed discussion of how courts in this District have
addressed the issue.
v
Some courts,
Control
lowing Architectronics/
Inc., 935 F. Supp. 425 (S.D.N.Y.
~----------------~~----~-----
1996) / have held that "the 'extra element' that saves a
contract claim from preemption is the promise itself."
439i
see also Canal &
(collecting cases).
at
UK/ 773 F. Supp. 2d at 442-443
Other courts, following American Movie
Turner Entertainment Co., 922 F. Supp. 926
(S.D.N.Y. 1996) / have held that "a breach of contract claim is
preempted if it is merely based on
legations that the
defendant did something that the copyright laws reserve
exclusively to the plaintiff (such as unauthorized
reproduction, performance, distribution or display)"
931i
see also Canal+
(collecting cases).
Id. at
UK, 773 F. Supp. 2d at 443
"The crux of the dispute between the
parties, therefore/ is whether the promise inherent in any
agreement, by itself/ provides the extra element necessary to
make a breach of contract
aim qualitatively different from a
copyright infringement claim."
2d at 443
Canal+ Image UK/ 773 F. Supp.
(quoting eScholar, LLC v. Otis Educational Sys.,
Inc./ 387 F. Supp. 2d 329, 332 (S.D.N.Y. 2005)).
17
As described above, reviewing the agreements before
the Court reveals that the "crux of the dispute between the
parties"
involves the contractual provisions that state,
"[i]f
catalog images are to be used for longer than 1 year, a fee
must be negotiated prior to use" and "[c]atalog use is one
year only unless otherwise negotiated."
Plaintiff has plead a
valid breach of contract claim on the theory that Defendant
breached its obligation under the agreements by using
Plaintiff's images beyond the one year licensing term without
negotiating a fee to be paid to Plaintiff.
This breach of
contract theory "provides the extra element necessary to make
a breach of contract claim qualitatively different from a
copyright infringement claim," Canal+ Image UK,
773 F. SUpp.
2d at 443, as Plaintiff bears the burden of proving not just
that Plaintiff used the images beyond the one-year licensing
agreement, but also that Defendant failed to negotiate a fee.
In support of the proposition that the breach of
contract claim is preempted, Defendant contends that there is
no agreement between the parties for Defendant to pay
Plaintiff for use beyond the one year license term, and, as
such, after the one-year licenses expired, the parties were
"strangers" to one another and any post termination reuse by
18
Defendant of Plaintiff's copyrighted photographs is subject to
the federal Copyright Act, not contract law.
New Kids on the Block P'
-------------------------------~
(S.D.N.Y. 1991)
See Marshall v.
,780 F. Supp. 1005, 1009
("Case law in this
rcuit indicates that a
copyright licensee can make himself a 'stranger' to the
licensor by using the copyrighted material in a manner that
exceeds either the duration or the scope of the license./I)
i
Kanakos v. MX Trading Corp., No. 81 Civ. 4632, 1981 WL 1377,
at *2 (S.D.N.Y. Sept. 16, 1981)
("Where a licensee utilizes a
copyrighted work in a manner or to an extent not authorized by
the license agreement, the licensee's position is no different
from that of an infringer having no contractual relationship
with the holder of the copyright.
In both cases, the
resulting cause of action is one for copyright infringement,
and the claims against both arise under the copyright
statutes./I).
However, as noted above, Plaintiff has pled a
valid breach of contract claim on the theory that Defendant
had a duty to negotiate a fee with Plaintiff and then failed
to fulfill this obligation.
The issue is not merely that
Defendant used Plaintiff's works without Plaintiff's
permission, but rather that Defendant broke its promise to
negotiate a fee to pay Plaintiff
the event Defendant
decided to use the images beyond the one-year licensing term.
19
The Second Circuit has recently addressed the issue
of breach of contract claim preemption in Copyright Act cases
in Forest Park Pictures v. Universal Television Network t Inc. t
683 F.3d 424
(2d Cir. 2012).
In that case t the Second Circuit
addressed an alleged agreement between Forest Park Pictures
and USA Network pertaining to a television show idea Forest
Park shared with USA Network under an implied agreement that
USA Network would compensate Forest Park
Network used Forest Parkts ideas.
the event USA
The Circuit squarely
addressed whether this implied agreement between Forest Park
and USA Network was preempted by Forest Parkts copyright
infringement claim t ultimately finding that the contract claim
was not preempted:
A number of our sister circuits have accordingly
concluded that at least some contract claims involving
the subject matter of copyright do not contest rights
that are the equivalent of rights under the Copyright
Act t and thus are not preempted.
[Citations to other
circuits t case law and treatise omitted.]
Of course t
preemption cannot be avoided simply be labeling a claim
"breach of contract.
A plaintiff must actually allege
the elements of an enforceable contract (whether express
or implied-in fact) t including of r t acceptance t and
consideration t in addition to adequately alleging the
defendantts breach of the contract.
1I
20
Here the Complaint specifically alleges that the contract
includes by implication a promise to pay for the use of
Forest Park's idea.
See Complaint ~ 11 (all ing that it
was understood when Forest Park met with Sepiol that they
were "pitching.
. ideas with the object of persuading
USA Network to purchase those ideas for commercial
development) (emphasis added); id. ~ 25 ("USA Network
voluntarily accepted Plaintiffs' ideas knowing full well
that Plaintiffs had submitted those ideas in confidence
and for economic gain, and with the
ear expectation of
payment in the event those ideas were utilized by USA
Network.
.") (emphasis added). The alleged contract
does not simply require USA Network to honor Forest
Park/s exclusive rights under the Copyright Act (assuming
the materi
at issue to be copyrightable) i it requires
USA Network to pay for the use of Forest Park's ideas. A
claim for breach of a contract including a promise to pay
is qualitatively different from a suit to vindicate a
right included in the Copyright Act and is not subject to
preemption.
Forest Park Pictures v. Universal Television Network
683 F.3d 424, 431-33 (2d Cir. 2012).
A review of the
agreements before the Court reveals that, similar to the
contract at issue in Forest Park where the agreement does "not
simply require USA Network to honor Forest Park's exclusive
rights under the Copyright Act .
.; it requires USA Network
to pay for the use of Forest Park's ideas," Forest Park, 683
F.3d at 432 33, the agreements in the present action do not
simply require Defendant to honor Plaintiff's rights under the
Copyright Act{ but rather obligate Defendant to negotiate a
fee prior to use of the images beyond the one year licensing
term.
A claim that Defendant failed to honor its agreement
21
with Plaintiff by failing to negotiate this fee is a
substantively different cause of action when compared to
Plaintiff's claim for copyright infringement.
Accordingly,
Plaintiff's claim for breach of contract is not preempted.
Upon Reconsideration, Plaintiff's Claims For Account Stated
Are Dismissed
In addition to requesting reconsideration concerning
breach of contract claim, Defendant has also moved to
reconsider the August 7 Opinion's denial of Defendant's motion
to dismiss Plaintiff's claims for account stated.
With
respect to Plaintiff's two claims for account stated, the
August 7 Opinion held:
An account stated claim requires "an agreement between
the parties to an account based upon prior transactions
between them.
"LeBoeuf, Lamb, Gree~e & MacRae,
L.L.P. v. Worsham, 185 F.3d 61, 64 (2d Cir. 1999)
(internal quotation marks and citations omitted).
"To
state a claim for an account stated, the plaintiff must
plead that: (1) an account was presented; (2) it was
accepted as correct; and (3) debtor promised to pay the
amount stated." IMG
Brands LLC v.
Inc., 679 F. Supp. 2d 395, 411 (S.D.N.Y. 2009) (internal
quotation marks and citations omitted). An agreement to
pay the account presented "may be implied if a party
receiving a statement of account keeps it without
objecting to it within a reasonable time or if the debtor
makes partial payment." Worsham, 185 F.3d at 64
(internal quotation marks and citations omitted)
"[U]nless fraud, mistake or other equitable
22
considerations are shown, the party who receives a
statement of account must examine the statement and make
all necessary objections in order to avoid implication of
an agreement." Feingold v. Chrismas, 818 F. Supp. 2d
763, 768 69 (S.D.N.Y. 2011) (citing Kramer, Levin,
Nessen, Kamin & Frankel v. Aronoff, 638 F. Supp. 714, 719
(S.D.N.Y.1986)).
According to Defendant, the fact that invoices were sent
illustrates that the parties had not come to an agreement
regarding the appropriate amount to be charged.
Defendant contends that the parties here were no longer
engaged in an ongoing business relationship, that
Plaintiff was merely demanding payment and that these
demands for payment were not met with silence but rather
led to meetings by the parties and their counsel to
review the facts and negotiate a resolution. To support
s position, Defendant cites the 1916 New York Court of
Appeals case
-Morris Co. v. Talcott, in which
then Judge Cardozo stated, "There is no doubt that an
account stated may sometimes result from the retention of
accounts current without objection. But the rest does
not always follow.
It varies with the circumstances that
surround he submission of the statements, and those
circumstances include, of course, the relation between
the parties." 219 N.Y. 50S, 511, 114 N.E. 846 (1916).
As noted above, in evaluating a motion to dismiss, the
issue "is not whether a plaintiff will ultimately prevail
but whether the claimant is entitled to offer evidence to
support the claims." ViII
Pond, 56 F.3d at 378.
Here, the Complaint alleges that Plaintiff sent various
invoices to Defendant and that Defendant did not object
to those invoices. As such, the Complaint pleads
sufficient facts to establish a claim for account stated,
and Defendant's motion to dismiss the two account stated
counts of the Complaint is denied.
Diodato, 2012 WL 3240428, at *10 11.
According to Defendant,
the issue of whether each of the invoices constitutes an
account stated is a question of law, not a question of fact.
23
Defendant criticizes the August 7 Opinion for only taking into
account the allegations in Plaintiff's complaint without
examining the documentary evidence establishing the true
nature of these invoices.
Defendant contends that had the
August 7 Opinion not overlooked the agreements, Defendant's
motion to dismiss the account stated claims would have been
granted.
Defendant, citing the standard relied upon in the
August 7 Opinion, see Diodato, 2012 WL 3240428 1 at *10
(citing
IMG Fragrance Brands, 679 F. Supp. 2d at 411), contends that
the August 7 Opinion inappropriately assessed whether
Plaintiff adequately alleged that ftan account was presented."
Again, citing cases relied upon by the August 7 Opinion
l
Defendant contends that ft[a]n account stated claim requires an
agreement between the parties to an account based upon prior
transactions between them[.]"
Diodato, 2012 WL 3240428, at
*10 (quoting LeBoeuf, 185 F.3d at 64).
However, as noted
above, Defendant contends that any ongoing agreements between
the parties terminated with the expiration of the last
original one-year license for the use of Plaintiff1s
photographs.
According to Defendant, because the agreements
submitted to the Court on the motion to dismiss did not
24
contain terms sufficient to bind the parties to a contractual
relationship past their expiration, the parties became
"strangers" to one another after the last agreement expired.
Accordingly, Defendant contends that the parties never agreed
upon the substance of the invoices Plaintiff sent to
Defendant, and the parties never "agreed on a balance of
indebtedness."
-Morris, 114 N.E. at 848.
------~~--.~-----
Defendant
states that the fact that Plaintiff's documents were called
"Infringement Invoices" and Plaintiff's notation that the
charges were "for unauthorized uses" further supports the
conclusion that the part
use.
s had not agreed upon the terms of
Defendant contends that had the August 7 Opinion
analyzed the documentary evidence before the Court, the
account stated claims would have been dismissed.
According to Plaintiff, the 2008 and 2010 invoices
at issue in Plaintiff's account stated claims are contracts
between Plaintiff and Defendant under which Defendant, in
advance, promised to pay Plaintiff an additional usage fee for
additional usage.
Plaintiff rejects the contention that these
invoices were communications demanding monetary relief for
Plaintiff's copyright claims.
Instead, according to
Plaintiff, these invoices were Plaintiff's demand that
25
Defendant pay the usage fee it promise to pay Plaintiff
event it reused the images.
the
Plaintiff contends that it only
billed Defendant for the usual rate of usage with no penalt
s
or damages for copyright infringement.
Notwithstanding Plaintiff's contentions, the
allegations in the complaint, when reviewed in conjunction
with the agreements before the Court, are insufficient to
establish that the parties "agreed on a balance of
indebtedness."
Newburger-Morris, 114 N.E. at 848.
The
invoices Plaintiff describes and attaches to the complaint are
"for unauthorized uses of its images."
complaint further
Compl.
~~
23, 25.
The
leges that "the particular unauthorized
uses identified in the 2008 Infringement Invoices and 2010
Infringement Invoices are part of Avon's pattern and practice
of using of plaintiff's photographic images in excess of the
one year usage license."
Compl. ~ 26.
As described above,
the agreements before the Court establish that "[i]f catalog
images are to be used for longer than 1 year, a fee must be
negotiated prior to use."
Because the
must be
"negotiated," it cannot be stated that the parties agreed upon
what that fee would be.
Accordingly, a review of the
agreements before the Court establish the lack of "an
26
agreement between the parties to an account based upon prior
transactions between them[.]"
Worsham, 185 F.3d at 64.
Without allegations sufficient to establish the existence of
such an agreement, Plaintiff's claims for account stated must
be dismissed.
Conclusion
Based on the conclusions set forth above,
Defendant's motion to reconsider is granted.
Upon
reconsideration, Plaintiff's claim for breach of contract
remains a validly pled cause of action, but Plaintiff's c
for account stated are dismissed.
It is so ordered.
New York/ NY
september~( , 2012
ROBERT W. SWEET
U.S.D.J.
27
ims
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