BREACH OF THE MAILING LIST CONTRACT
11. "In New York as elsewhere, it is beyond cavil that the failure of a party to perform its obligations under a valid and binding contract constitutes a breach and entitles the other contractually bound party to damages which arose out of the breach." Custom Imports, Inc. v. Hanmee Trading Co., Inc., 596 F. Supp. 1126, 1130 (S.D.N.Y. 1984); Manufacturers and Traders Trust Co. v. Cottrell, 71 A.D.2d 538, 543, 422 N.Y.S.2d 990, 993 (4th Dep't 1979). The plaintiff asserts that the defendants breached the mailing list Agreement by failing to provide the functional requirements required to complete the system. The plaintiff therefore asserts that it is entitled to the final payment of $ 2,075 it was to receive under the contract. The defendants have counterclaimed for breach of the mailing list Agreement, contending that they did provide SJA at least with oral specifications, but SJA failed to complete the mailing list system. Hit-Tix seeks to recover profits it alleges it lost as a result of the EZ-TIXZ's failure to complete the system.
12. Neither party has proved that it is entitled to any recovery for breach of the alleged mailing list agreement. EZ-TIXZ failed to deliver a completed mailing list system to Hit-Tix. While EZ-TIXZ blames Hit-Tix for failing to provide required specifications, it failed to present credible evidence that the information it did receive was insufficient to complete the mailing list program. Therefore, EZ-TIXZ is not entitled to prevail, because it has failed to prove that it complied with all of the provisions of the Agreement.
13. Nor is Hit-Tix entitled to recover on its counterclaim. Hit-Tix plainly did have an obligation to provide EZ-TIXZ with information to complete the system, and Hit-Tix failed to present credible evidence that its degree of compliance with these obligations was sufficient to require further performance by EZ-TIXZ. Moreover, even if Hit-Tix had proven that EZ-TIXZ breached the Agreement, Hit-Tix failed to present any credible evidence that it suffered any damages. While Hit-Tix presented and relied upon the testimony of its principals that it could have earned a substantial profit by using the mailing list program, that testimony was wholly speculative and not credible in view of Hit-Tix's decision not to press EZ-TIXZ to complete the system.
COUNTERCLAIM FOR FRAUDULENT MISREPRESENTATIONS
14. In their counterclaim for fraud, the defendants assert that Studnicka and Jaufmann made representations that Hit-Tix would only be required to pay a one-time license fee, but subsequently demanded the payment of additional royalty and licensing fees. Under New York law, "a person who induces another to enter into a contract by making a promise which he has no intention of keeping may be held liable in damages for fraud." DiRose v. PK Management Corp., 691 F.2d 628, 630 (2d Cir. 1982), cert. denied, 461 U.S. 915, 77 L. Ed. 2d 285, 103 S. Ct. 1896 (1983). "The essential elements of the injured party's cause of action are 'representation of a material existing fact, falsity, scienter, deception and injury.'" DiRose, 691 F.2d at 629 (citing Channel Master Corp. v. Aluminium Limited Sales, Inc., 4 N.Y.2d 403, 407, 176 N.Y.S.2d 259, 259, 151 N.E.2d 833 (1957)); see also Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 421, 646 N.Y.S.2d 76, 80, 668 N.E.2d 1370 (1996).
15. At trial, the defendants only demonstrated that Studnicka and Jaufmann had not requested, prior to the implementation of Studnicka's proposal regarding the System, that Hit-Tix pay fees in addition to the original $ 2,100. The defendants failed to introduce any credible evidence that Studnicka and Jaufmann actually made any affirmative misrepresentations or promises that they would not seek such fees in the future. Nor did the defendants prove any other alleged misrepresentations. Thus, because they have not proved that the Studnicka or Jaufmann made misrepresentations or false promises, the defendants have failed to prove their counterclaim for fraud.
The plaintiff is entitled to a judgment against the defendants for $ 2,250.00 for non-payment of fees for service calls. The plaintiff's remaining claims for breach of contract are dismissed. The plaintiff's copyright claim is dismissed. The defendants counterclaims are dismissed. The Court will enter Judgment consistent with this Opinion.
Dated: New York, New York
July 2, 1997
John G. Koeltl
United States District Judge