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June 7, 1994

SIMON & SCHUSTER, INC., Defendant.

The opinion of the court was delivered by: MIRIAM GOLDMAN CEDARBAUM


 This diversity action arises from a dispute over a publishing contract between plaintiff, Alternative Thinking Systems ("ATS"), a Canadian corporation, and defendant, Simon & Schuster, a New York corporation. The complaint alleges that after Simon & Schuster had accepted as satisfactory for publication a book written by Ian Borts, the late President of ATS, it breached the contract by refusing to publish the book. ATS seeks specific performance of the agreement to publish and, in the alternative, money damages. Simon & Schuster counterclaims for reimbursement of the two advance payments it made to ATS. Simon & Schuster now moves for summary judgment on ATS' claims and on its own counterclaims. ATS cross-moves for summary judgment on its claims, and moves to dismiss the counterclaims *fn1" and strike the affirmative defenses.

 For the reasons discussed below, the motions of both sides for summary judgment on ATS' claims are denied, as is Simon & Schuster's motion for summary judgment on its counterclaims. ATS' motion for summary judgment dismissing Simon & Schuster's counterclaims is granted, as is its motion to strike the fourth and fifth affirmative defenses. ATS' motion to strike the first, second, third, sixth, and seventh affirmative defenses is denied as premature.

 The Facts

 The following facts are undisputed. On June 24, 1987, ATS entered into a contract with Simon & Schuster, in the form of a "Publishing Agreement" and a "Basic Agreement," regarding a book to be written by Borts. Borts signed an Individual Guaranty, in which he "unconditionally guaranteed to [Simon & Schuster] the due performance by [ATS] . . . of all the terms and conditions thereof on its part to be performed . . . ." (Bender Aff. Ex. D.) Simon & Schuster agreed to pay ATS $ 162,500 in advances, which were to be made in four equal installments. The first payment was to be made upon the signing of the contract; the second payment, upon Simon & Schuster's acceptance of Borts' final manuscript as satisfactory for publication; the third payment, upon publication of the initial hardcover edition; and the fourth payment, six months after publication of the initial hardcover edition. (Id. Ex. B, P Second C.) The first payment was made when the contract was signed on June 24, 1987.

 Borts, a self-described "professional deep-trance medium," prepared a manuscript in which he described actual case histories of his experiences in transmitting medical advice he received from a "grouping of discarnate entities called the Speakers" to patients with various incurable diseases. (Id. Ex. A.) The final manuscript was delivered to Simon & Schuster more than six months after the scheduled December 31, 1987 due date. (Id. PP 13, 17; Ex. B P First A.) In July 1988, Simon & Schuster accepted the manuscript, made the second advance payment according to the agreement, and scheduled publication for February 1989. (Id. P 17; Ex. H.) Simon & Schuster then reviewed the manuscript for stylistic changes and typographical errors, and Borts submitted his responses to these changes in early September 1988. (Id. P 19.) On September 10, 1988, at the age of 32, Borts died from a "post-operative complication" after an operation for "massive G.I. bleeding." (Hinrichs Aff. Ex. D.) Borts had been admitted to the hospital on August 26, 1988, six weeks after symptoms of cirrhosis of the liver had been detected. (Id.)

 Following Borts' death, Simon & Schuster wrote to ATS' agent, William Morris, Inc., stating that:

It's our opinion that we can't do an effective job of publicizing and promoting the book without [Borts]. We also think that the issue of credibility, which has always been the problem we'd have to overcome with the book, may now be a bigger problem than ever. Without [Borts] to say, "It actually happened to me," we'll have a tougher time convincing the media that the events described in the book are true."

 (Bender Aff. Ex. F.) Simon & Schuster's letter concludes that "as a result, we've decided to take the book off our Winter 1989 list and to postpone it. At the present time I have no idea when we'll publish it." (Id.)

 On October 7, 1988, ATS' agent responded by reminding Simon & Schuster of its obligation under the Publishing Agreement to publish the book within eighteen months of acceptance. (Id. Ex. G.) On November 9, 1988, Simon & Schuster stated that it could not confirm that the book would be published within the eighteen-month period and offered to proceed according to P 84 of the Basic Agreement which would allow the rights to the book to revert to ATS and would allow ATS to keep the advance payments already received if the book were not published within 180 days. (Id. Ex. H.) In reply, ATS' agent stated that P 84 did not apply and demanded that all remaining advances be paid immediately in light of Simon & Schuster's willful refusal to publish. (Id. Ex. J.)

 Three and one-half years later, in June 1992, ATS commenced this action for breach of contract. Simon & Schuster contends that it has performed all of its obligations under the contract. In addition, Simon & Schuster asserts a number of affirmative defenses, including ATS' failure to disclose Borts' illness, ATS' failure to make reasonable efforts to mitigate its damages, ATS' anticipatory breach of the contract, and frustration of the contract's purpose. Finally, Simon & Schuster asserts two counterclaims, each alleging a different theory for the return of the advance payments of $ 81,250.


 Summary judgment is authorized when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). In examining the record, the court "must resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party." Gibson v. American Broadcasting Cos., Inc., 892 F.2d 1128, 1132 (2d Cir. 1989); see Celotex, 477 U.S. at 330 n.2. The judge's role in summary judgment is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 I. ATS' Claims

 ATS argues that it is entitled to summary judgment based on the clear language of the contract which states that Simon & Schuster shall publish the book within eighteen months of acceptance. Simon & Schuster, on the other hand, argues that it has an absolute right to choose not to publish the book and that the language of the contract supports this position. Simon & Schuster adds that, in any event, it never decided not to publish the book and that it was ATS that "unilaterally denied [Simon & Schuster] the right to a delay . . . and deemed [Simon & Schuster] in breach and demanded immediate payment." (Def. Reply Mem. at 9.) According to Simon & Schuster, ATS' only remedy when faced with the publisher's decision to delay publishing was to reclaim the rights to the book and retain the advances already paid. Simon & Schuster also argues that it was not obligated to publish the book because Borts' death interfered with its ability to complete a legal review of the book.

 A. Does a Publisher Have an Absolute Right Not to Publish?

 Simon & Schuster argues that absent bad faith, a publisher has an absolute right to decide not to publish a book. For this proposition, Simon & Schuster relies on Doubleday & Co., Inc. v. Curtis, 763 F.2d 495 (2d Cir. 1985), and Random House, Inc. v. Gold, 464 F. Supp. 1306 (S.D.N.Y.), aff'd, 607 F.2d 998 (1979). Neither of these cases grants publishers an absolute right not to publish. The courts in Curtis and Gold each held that when a publishing contract conditions acceptance of a manuscript on its being "satisfactory to the publisher," the publisher has a duty to make this determination in good faith. Curtis, 763 F.2d at 500; Gold, 464 F. Supp. at 1308. Although the contract at issue here also contains a provision giving Simon & Schuster the right to decide whether Borts' ...

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