Keep On Kicking Music, Limited v. Hibbert et al
Filing
47
OPINION & ORDER re: 39 MOTION for Judgment on the Pleadings . MOTION to Dismiss filed by Keep On Kicking Music, Limited, Marc Antoine Chetata. Plaintiff Keep On Kicking Music, Limited's motion for judgment on the pleadings is granted in part. Specifically, this Court finds that KOK UK is the exclusive and worldwide administrator of the compositions on the original Schedule A to the Administration Agreement, the owner of an undivided fifty percent inter est in those compositions, and co-publisher of those compositions. Additionally, this Court finds that Defendants' breached the Settlement Agreement. Plaintiff's motion for judgment on the pleadings is otherwise denied. Keep on Kicking Music, Limited and Marc Chetata's motion to dismiss Defendants' fraud claim is granted. Defendants' remaining counterclaims and third-party claims are otherwise limited in accord with this Opinion and Order. The Clerk of Court is directed to terminate the motion pending at ECF No. 39. (As further set forth in this Opinion & Order.) (Signed by Judge William H. Pauley, III on 8/17/2016) (mro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
KEEP ON KICKING MUSIC, LTD.,
Plaintiff,
-againstFREDERICK “TOOTS” HIBBERT, et al.,
Defendants.
:
:
:
:
:
:
:
:
:
:
:
15cv7464
OPINION & ORDER
WILLIAM H. PAULEY III, District Judge:
Plaintiff Keep on Kicking Music, Limited (“KOK UK”) brings this breach of
contract and tortious interference action against Defendants Frederick “Toots” Hibbert; Toots
Music, Inc.; and Alla Son Music Inc. (collectively, “Defendants”). KOK UK also seeks
declaratory and injunctive relief regarding its rights to music composed by Hibbert. Defendants
counterclaim for unjust enrichment, conversion, and breach of contract against KOK UK, and
also assert third-party claims of unjust enrichment, conversion, and fraud against KOK UK’s
principal Marc Chetata.
KOK UK moves for judgment on the pleadings with respect to several of its
claims against Defendants. KOK UK and Chetata also move to dismiss Defendants’
counterclaims and third-party claims. KOK UK and Chetata’s motions are granted in part and
denied in part.
BACKGROUND
The following facts are derived from the Amended Complaint (ECF No. 27), and
the Amended Answer and Third Party Complaint (ECF Nos. 28–29).
I.
KOK UK’s Complaint
In June 1994, Hibbert, Toots Music, and Keep on Kicking Music, Inc. (a non-
party New York corporation referred to herein as “KOK NY”) entered into an Exclusive
Administration Agreement (the “Administration Agreement”). (Am Compl. Ex. 2.) The
Administration Agreement gave KOK NY exclusive administration rights to some of Hibbert’s
musical compositions, as well as an undivided 50% interest in them. (Am. Compl. ¶ 2.) The
Administration Agreement also provided that it would “be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.” (Am Compl. Ex. 2
§ 6.) Schedule B of the Administration Agreement acknowledged a $3,500 payment to Hibbert
as “an advance recoupable against future publishing monies to be due by Keep on Kicking.”
(Am. Compl. Ex. 2 at Schedule B.) In January 1995, Hibbert executed Schedules D and E,
which acknowledged receipt of additional payments. (Am Compl. ¶¶ 35–36.)
In September 1997, KOK UK was formed in the United Kingdom. The following
month, KOK NY assigned its interests under the Administration Agreement to KOK UK. (Am.
Compl. ¶¶ 30–43.) In December 1997, Hibbert signed an addendum to the Administration
Agreement, acknowledging that the Administration Agreement had been assigned to KOK UK
(the “Administration Agreement Addendum”). (Am Compl. ¶ 47.) In a separate letter, Hibbert
acknowledged that KOK UK and KOK NY “exclusively administrated” his copyrights and
“represent[ed his] catalog.” (Am Compl. ¶¶ 51–52; Ex. 5.) Hibbert also agreed to bring more
compositions within the ambit of the Administration Agreement by executing a document titled
“Additional Songs added to Schedule ‘A’ of Agreement Dated June 17, 1994 Between Frederick
Hibbert – Toots Music And Keep On Kicking Music, Inc. now between Alla SonMusic Inc. &
Keep On Kicking Ltd” (the “Additional Compositions”). (Am. Compl. ¶ 53, Ex. 2.)
2
In September 1998, KOK NY was dissolved. (Am Compl. ¶ 54; Ex. 1.) Six years
later, a new Delaware corporation, Keep on Kicking Music, Inc. (“KOK Delaware”), acquired
certain rights under the Administration Agreement from KOK UK. (Am Compl. ¶ 56.)
In 2007, KOK UK learned that Hibbert and Toots Music had attempted to assign
some of the compositions governed by the Administration Agreement to Universal-Songs of
Polygram International, Inc. (“Universal” and the “Universal Compositions”). (Am Compl ¶
57.) In January 2008, KOK Delaware, Universal, Hibbert, and Toots Music entered into a
Settlement Agreement that “fully and finally releas[ed] and forever discharge[ed KOK
Delaware] and [] Chetata and [their] . . . affiliates . . . and assigns . . . from [all] claims . . . which
Hibbert . . . has at any time heretofore had . . . or may at any time hereafter have” concerning the
Universal Compositions. (Am Compl. ¶¶ 57, 64; Ex. 2.)
In 2013, Hibbert sued KOK NY and Chetata in this District. See Frederick
“Toots” Hibbert, p/k/a Toots and the Maytals v. Keep on Kicking Music, Inc., 13-cv-3664 (PAC)
(S.D.N.Y.) (the “2013 Lawsuit”). Among other things, the 2013 Lawsuit asserted claims
concerning the Universal Compositions. While Hibbert’s complaint acknowledged KOK NY’s
dissolution, he obtained a default judgment against KOK NY declaring that “all contractual
agreements between Plaintiff Toots and Defendant [KOK NY] are null and void, and that all
musical compositions transferred or otherwise encumbered by Defendant [KOK NY] under such
agreements are returned to Plaintiff.” (Am Compl. ¶ 79; Ex. 9.) The Default Judgment also
awarded Hibbert $1,895,097.41 against KOK NY. (Am Compl. ¶ 79; Ex. 9.) Chetata, the other
defendant, was never served with the complaint. (Am Compl. ¶ 73.)
Hibbert used the Default Judgment to cloud KOK UK’s rights to the
compositions. (Am. Compl. ¶ 80.) KOK UK alleges that it has incurred significant costs and
3
expenses as a result of those actions. (Am. Compl. ¶ 82.) In April 2016, this Court vacated the
Default Judgment on consent. (ECF No. 38.)
II.
Defendants’ Amended Answer, Counterclaims and Third Party Complaint
The Amended Answer generally asserts that Defendants “are without the
knowledge or information sufficient to form a belief as to the truth of the allegations.”
However, Hibbert: (1) admits to “entering into [the Administration Agreement] with KOK NY
on June 17, 1994” (Am. Answer ¶ 22); (2) denies signing the Administration Agreement
Addendum or December 1997 letter acknowledging the assignment from KOK NY to KOK UK
(Am. Answer ¶¶ 46–53); (3) admits releasing claims related to the Universal Compositions (Am.
Answer ¶ 59); (4) admits filing the 2013 Lawsuit (Am. Answer ¶ 67); (5) denies agreeing to add
the Additional Compositions to the Administration Agreement (Compare Am. Compl. ¶ 53, Ex.
2 with Am. Compl. ¶¶ 53, 121.); and (6) does not recall signing Schedules B–E to the
Administration Agreement. (Am. Answer ¶¶ 114–16.)
Additionally, Hibbert alleges that Chetata misrepresented the purpose of the
Administration Agreement by asserting that it only gave Chetata the rights to collect “tour
advances” from promoters. (Am Answer ¶¶ 107–10.) Hibbert also asserts that any documents
he does not recognize but appear to bear his signature “had to have been created by someone
under the direct supervision or control of Chetata.” (Am. Answer ¶ 122.) Finally, Hibbert
maintains that Chetata held KOK NY out to be a corporation in good standing after its
dissolution, and that Chetata and the KOK entities generally failed to provide regular statements
and pay royalties under the Administration Agreement. (Am. Answer ¶ 124–29.)
LEGAL STANDARD
“A motion to dismiss counterclaims is governed by the familiar standards of Rule
12(b)(6).” IDI Design Inc. v. A.O.D. Jewelry Co., No. 13-cv-08266 (CM), 2014 WL 661355, at
4
*2 (S.D.N.Y. Feb. 19, 2014). Thus, the factual allegations in a non-movant’s pleadings are
accepted as true and all reasonable inferences are drawn in the non-movant’s favor. Rescuecom
Corp. v. Google Inc., 562 F.3d 123, 127 (2d Cir. 2009). To survive a motion to dismiss, such
pleadings “must contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 663, 678 (2009) (citation omitted); Ruston v.
Town Bd. for Town of Skaneateles, 610 F.3d 55, 59 (2d Cir. 2010). “[L]abels and conclusions”
or a “formulaic recitation of the elements of a cause of action” are insufficient. Iqbal, 556 U.S.
at 678 (citation omitted).
Motions for judgment on the pleadings under Rule 12(c) are governed by the
same standards applicable to motions to dismiss under Rule 12(b)(6). See Cleveland v. Caplaw
Enter., 448 F.3d 518, 521 (2d Cir. 2006). A “plaintiff may not secure a judgment on the
pleadings when the answer raises issues of fact that, if proved, would defeat recovery.” Flextech
Rights Ltd. v. RHI Entm’t, LLC, No. 09-cv-3462 (DC), 2010 WL 245570, at *1 (S.D.N.Y. Jan.
22, 2010) (quotation marks omitted); see also Transamerica Fin. Life Ins. Co. v. Session, No. 10cv-1328 (HB), 2010 WL 4273294, at *2 (S.D.N.Y. Oct. 28, 2010) (“[A] motion pursuant to Rule
12(c) . . . will be granted only where, on the facts admitted by the non-moving party, the moving
party is clearly entitled to judgment.”).
DISCUSSION
KOK UK seeks (1) a declaration of its rights in the compositions, (2) a finding
that Defendants breached the Administration Agreement, and (3) a finding that Defendants
breached the Settlement Agreement. KOK UK and Chetata also move to dismiss Defendants’
counterclaims and third-party claims.
5
I.
Judgment on the Pleadings
A. Plaintiff’s Rights in the Compositions
KOK UK seeks a judgment declaring that it is the exclusive and worldwide
administrator of Hibbert’s compositions, the owner of an undivided fifty percent interest in
Hibbert’s compositions, and co-publisher of Hibbert’s compositions.
Hibbert’s defense that he did not read the Administration Agreement is
insufficient as a matter of law. “Under New York law, a person who signs an agreement is
conclusively bound by it even if he did not read the agreement or understand its terms.” Kearins
v. Panalpina, Inc., 570 F. App’x 9, 10 (2d Cir. 2014) (citing Gillman v. Chase Manhattan Bank,
73 N.Y.2d 1, 11–12 (1988)). Moreover, “there is no requirement in the law that consultation
with a lawyer must occur in order to render a contractual obligation enforceable.” Reach Music
Pub., Inc. v. Warner/Chappell Music, Inc., No. 09-cv-5580 (KBF), 2014 WL 5861984, at *7
(S.D.N.Y. Nov. 10, 2014) (quotation marks omitted).1
Hibbert also asserts that he was unaware of the KOK UK assignment. But the
Administration Agreement is binding upon any “assigns” and does not require a counterparty’s
consent to assignment. Because it is unclear how his lack of knowledge would invalidate the
assignment, Hibbert has not raised an issue of fact that would defeat recovery. See Transamerica
Fin. Life Ins. Co. v. Session, No. 10-cv-1328 (HB), 2010 WL 4273294, at *3 (S.D.N.Y. Oct. 28,
2010) (finding that courts may rely on documents annexed to a complaint where the defense to
the motion for judgment on the pleadings was based on a lack of knowledge or information
1
Similarly, “[a] mere assertion that one does not recall signing a document does not, by itself, create an
issue of fact as to whether a signature on a document is valid—especially in the absence of any evidence the
document was fabricated.” Gonder v. Dollar Tree Stores, Inc., 144 F. Supp. 3d 522 (S.D.N.Y. 2015) (granting a
motion to compel arbitration despite opponent’s argument that he did not recall signing the arbitration agreement);
Reach Music Pub., Inc., 2014 WL 5861984, at *7 (rejecting, as a defense to a contract claim, the argument that a
party “lacked memory of signing the agreements, . . . was unrepresented by counsel at the time, . . . did not keep any
copies of the agreements, [and] did not read—much less understand—the agreements”)
6
sufficient to form a belief). On the other hand, Hibbert expressly denies adding the Additional
Compositions to the Administration Agreement. (Compare Am. Answer ¶ 53, Ex. 2 with Am.
Compl. ¶¶ 53, 121.) Accordingly, KOK UK’s motion is granted with respect to the compositions
on the original Schedule A to the Administration Agreement (ECF No. 27-2 at 5–6), and denied
with respect to the Additional Compositions (ECF No. 27-2 at 7–15).
B. Breaches of the Administration Agreement
KOK UK seeks a declaration that Defendants breached the Administration
Agreement. However, in arguing that Hibbert breached the Administration Agreement, KOK
UK relies principally on a December 2001 letter implying that Hibbert entered into a publishing
agreement with Maxwood Music Ltd. But the Amended Complaint contains no apparent
reference to Maxwood or the December 2001 letter. Moreover, Defendants generally deny
breaching the Administration Agreement, and assert their own breach of contract claim against
KOK UK. Accordingly, this Court declines to grant judgment on the pleadings to KOK UK with
respect to Defendants’ alleged breaches of the Administration Agreement.
C. Breach of the Settlement Agreement
KOK UK seeks a declaration that Defendants breached the Settlement
Agreement. “In order to recover from a defendant for breach of contract, a plaintiff must prove,
by a preponderance of the evidence, (1) the existence of a contract between itself and that
defendant; (2) performance of the plaintiff’s obligations under the contract; (3) breach of the
contract by that defendant; and (4) damages to the plaintiff caused by that defendant’s breach.”
Diesel Props S.r.l. v. Greystone Bus. Credit II LLC, 631 F.3d 42, 52 (2d Cir. 2011).
In the Settlement Agreement, Hibbert released all claims concerning the
7
Universal Compositions. KOK UK alleges that Hibbert breached the Settlement Agreement by
filing the 2013 Lawsuit, which asserted claims concerning the Universal Compositions.
Hibbert’s only rebuttal is that such an argument “assumes or implies facts that are
either denied or in dispute in some manner by Hibbert.” (Opp’n at 10.) But Hibbert admits that
the Settlement Agreement resolved Hibbert’s claims regarding the Universal Compositions, and
further acknowledges filing the 2013 Lawsuit, which asserted claims arising, in part, out of those
compositions. Accordingly, this Court finds that Hibbert breached the Settlement Agreement.
However, the issue of damages is best resolved after fact discovery is complete.
II.
Motion to Dismiss Defendants’ Counterclaims and Third-Party Claims
A. Unjust Enrichment
“To prevail on a claim for unjust enrichment in New York, a plaintiff must
establish (1) that the defendant benefitted; (2) at the plaintiff’s expense; and (3) that equity and
good conscience require restitution.” Beth Israel Medical Center v. Horizon Blue Cross and
Blue Shield of New Jersey, Inc., 448 F.3d 573, 586 (2d Cir. 2006). New York law “precludes
unjust enrichment claims whenever there is a valid and enforceable contract governing a
particular subject matter.” Beth Israel Med. Ctr., 448 F.3d at 587. Moreover, “[u]nder New
York law, the six-year limitations period for unjust enrichment accrues upon the occurrence of
the wrongful act giving rise to a duty of restitution and not from the time the facts constituting
the fraud are discovered.” Cohen v. S.A.C. Trading Corp., 711 F.3d 353, 364 (2d Cir. 2013)
(quotation marks omitted).
As discussed above, the pleadings demonstrate that the Administration Agreement
is a valid contract governing those compositions listed on Schedule A. Accordingly, Hibbert’s
unjust enrichment claim must be dismissed to the extent it concerns those compositions because
8
New York law “precludes unjust enrichment claims whenever there is a valid and
enforceable contract governing a particular subject matter.” Beth Israel Med. Ctr., 448 F.3d at
587; see also Randall’s Island Aquatic Leisure, LLC v. City of New York, 92 A.D.3d 463, 464
(1st Dep’t 2012) (“There can be no quasi-contract claim against a third-party non-signatory to a
contract that covers the subject matter of the claim.”). While Defendants’ unjust enrichment
claim survives with respect to the Additional Compositions, Defendants may not recover for
wrongful acts outside of the six-year statute-of-limitations period.
B. Conversion
Under “New York law, conversion is the unauthorized assumption and exercise of
the right of ownership over goods belonging to another to the exclusion of the owner’s rights.”
Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 403–04 (2d Cir. 2006). “New York’s statute
of limitations for conversion claims is three years, N.Y. C.P.L.R. § 214(3), and accrues at the
time of conversion regardless of a plaintiff’s knowledge of the conversion.” United Teamster
Fund v. MagnaCare Admin. Servs., LLC, 39 F. Supp. 3d 461, 478 (S.D.N.Y. 2014).
Hibbert’s conversion claim seems to be premised on the argument that KOK UK
and Chetata had no right to Hibbert’s compositions when KOK NY was dissolved because
Hibbert did not know of the dissolution. However, the pleadings raise no material issues of fact
regarding KOK UK’s rights in the compositions originally listed on Schedule A. Thus any
conversion claim arising out of those compositions is dismissed. While Defendants’ conversion
claim survives with respect to the Additional Compositions, it is time-barred to the extent it
seeks royalties outside of the three-year statute of limitations period.
9
C. Fraud
“Under New York law, the elements of common law fraud are a material, false
representation, an intent to defraud thereby, and reasonable reliance on the representation,
causing damage to the plaintiff.” Chanayil v. Gulati, 169 F.3d 168, 171 (2d Cir. 1999) (internal
quotation marks omitted). “In alleging fraud . . . , a party must state with particularity the
circumstances constituting fraud.” Fed. R. Civ. P. 9(b). “[I]n order to comply with Rule 9(b),
the complaint must: (1) specify the statements that the plaintiff contends were fraudulent, (2)
identify the speaker, (3) state where and when the statements were made, and (4) explain why the
statements were fraudulent.” Lerner v. Fleet Bank, N.A., 459 F.3d 273, 290 (2d Cir. 2006).
Moreover, “[u]nder New York law, the Statute of Limitations for a fraud is six years from the
date of the commission of the fraud, or two years from the date the fraud was or could
reasonably have been discovered, whichever is longer.” Scherer v. Gaildon Med. Sys., Inc., No.
02-cv-8847 (DAB), 2004 WL 2884312, at *3 (S.D.N.Y. Dec. 10, 2004).
Defendants’ fraud allegations appear premised on misrepresentations about KOK
NY after the firm was dissolved. But those allegations—vague references to a February 2006
letter in which “KOK NY was made to appear as if it were still a corporation in good standing,”
and an “email dated March 2013, from Chetata and the defunct KOK Music Inc.” (Am. Answer
¶¶ 124, 126.)—fail to satisfy Rule 9(b). Moreover, it is entirely unclear how Defendants relied
on those misrepresentations to their detriment. For example, the allegation that “Defendant[s’]
reliance upon the misrepresentation was so strong that Defendant Hibbert believed that KOK-NY
continued to exist right up until Defendant Hibbert filed suit against the defunct KOK NY” is
belied by the 2013 Lawsuit, which acknowledged KOK NY’s dissolution. (Am. Compl. Ex. 7 ¶
21.) Additionally, KOK NY’s dissolution was not a secret; such information was publicly
10
available from New York’s Secretary of State. Accordingly, Defendants’ fraud claim is
dismissed.
D. Breach of Contract
Hibbert alleges that KOK UK breached the Administration Agreement by failing
to provide regular statements and payment of royalties. Plaintiff moves to dismiss that claim
primarily on the basis that it is time-barred under New York’s six-year statute of limitations for
contract claims. Hibbert’s claim is time-barred to the extent it seeks royalties outside of “New
York's six-year limitations period[, which] generally runs from the time the contract was
breached.” Deutsche Bank Nat. Trust Co. v. Quicken Loans Inc., 810 F.3d 861, 865 (2d Cir.
2015). But Hibbert also pleads that he was not paid contractually owed royalties even within six
years of the filing of the Complaint. Accordingly, that portion of his breach of contract claim
survives at this stage.2
2
Though Defendants do not raise the issue of rescission, it is worth noting that, to the extent Hibbert’s
claim could be read as one for rescission of the Administration Agreement, it is time-barred. See Greene v. Greene,
56 N.Y.2d 86, 436 N.E.2d 496 (1982) (a claim for rescission based on not understanding an agreement has a sixyear statute of limitations). The same would be true even if the rescission claim were “based on fraud,” as the twoyear statute of limitations would begin to run no later than Hibbert’s December 2001 letter, wherein Hibbert
challenged KOK NY’s rights to the compositions. This Court may take judicial notice of the letter, filed by Hibbert
in connection with the 2013 Lawsuit, for purposes of determining accrual of the statute of limitations. See Staehr v.
Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 425 (2d Cir. 2008) (“[I]t is proper to take judicial notice of the fact
that press coverage, prior lawsuits, or regulatory filings contained certain information, without regard to the truth of
their contents, in deciding whether so-called ‘storm warnings’ were adequate to trigger inquiry notice as well as
other matters.”); Global Network Commc’ns, Inc. v. City of New York, 458 F.3d 150, 157 (2d Cir. 2006) (“A court
may take judicial notice of a document filed in another court not for the truth of the matters asserted in the other
litigation but rather to establish the fact of such litigation and related filings.” (citation omitted)).
11
CONCLUSION
Plaintiff Keep On Kicking Music, Limited’s motion for judgment on the
pleadings is granted in part. Specifically, this Court finds that KOK UK is the exclusive and
worldwide administrator of the compositions on the original Schedule A to the Administration
Agreement, the owner of an undivided fifty percent interest in those compositions, and copublisher of those compositions. Additionally, this Court finds that Defendants’ breached the
Settlement Agreement. Plaintiff’s motion for judgment on the pleadings is otherwise denied.
Keep on Kicking Music, Limited and Marc Chetata’s motion to dismiss
Defendants’ fraud claim is granted. Defendants’ remaining counterclaims and third-party claims
are otherwise limited in accord with this Opinion and Order.
The Clerk of Court is directed to terminate the motion pending at ECF No. 39.
Dated: August 17, 2016
New York, New York
SO ORDERED:
_______________________________
WILLIAM H. PAULEY III
U.S.D.J.
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?