United States District Court, Southern District of New York
July 23, 2003
B. LEWIS PRODUCTIONS, INC., PLAINTIFF,
MAYA ANGELOU AND HALLMARK CARDS, INCORPORATED, DEFENDANTS. MAYA ANGELOU, COUNTERCLAIM PLAINTIFF, V. B. LEWIS PRODUCTIONS, INC. AND BUTCH LEWIS, COUNTERCLAIM DEFENDANTS.
The opinion of the court was delivered by: Michael Mukasey, Chief Judge, District
OPINION AND ORDER
In this diversity action, B. Lewis Productions, Inc. ("BLP") sues Maya Angelou for breach of fiduciary duty and breach of contract. BLP also sues Hallmark Cards, Inc. ("Hallmark") for tortious interference with a contract and for aiding and abetting Angelou's breach of fiduciary duty. Angelou counterclaims, alleging fraud and unilateral mistake against both BLP and its president, Butch Lewis. Angelou and Hallmark move for summary judgment dismissing the claims against them. BLP and Lewis cross-move for partial summary judgment dismissing Angelou's counterclaims. For the reasons set forth below, all motions are granted.
The following facts are undisputed except as described otherwise. Angelou is a resident of North Carolina and a renowned poet. (Compl. ¶¶ 1; 4) BLP is a New York corporation with its principal place of business in New York City. (Id. ¶ 3) Butch Lewis is the president and owner of BLP. (Id.) Hallmark is a Missouri corporation with its principal place of business in Kansas City, Missouri. (Id. ¶ 5)
A. The Letter
On November 22, 1994, BLP sent Maya Angelou a letter ("the Letter"). (Angelou's 56.1 ¶ 2; BLP's 56.1 ¶ A.2) The Letter, eventually signed by both parties, stated:
This letter agreement made between B. Lewis
Productions, Inc. . . . and Maya Angelou . . .,
sets forth the understandings of the parties with
reference to the following:
1. The parties will enter into a joint venture
(Venture), wherein ANGELOU will exclusively
contribute original literary works (Property) to the
Venture and BLP will seek to the exploit the rights
for publishing of said Property in all media forms
including, but not limited to greeting cards,
stationary, and calendars, etc.
2. BLP will contribute all the capital necessary to
fund the operation of the Venture.
3. Angelou will contribute, on an exclusive basis,
original literary works to the Venture after
consultations with and mutual agreement of Butch
Lewis, who will be the managing partner of the
4. The Venture shall own the copyrights to all of
Angelou's contributions to the Venture.
(a) If any of the subject copyrights do not produce
any income for a consecutive five (5) year period as
a result of the exploitation referred to in paragraph
1 herein then the ownership of these copyrights shall
revert to Angelou exclusively.
5. The name of the Venture shall be mutually agreed
6. Gross Revenue shall be distributed and applied in
the following order:
(a) Return of BLP's capital contribution.
(b) Reimbursement of any and all expenses of the
(c) Balance (net profits) to be shared equally
between BLP and Angelou.
(d) Angelou shall have the right at any time, upon
reasonable notice, to inspect all records including
but not limited to the financial records of the
This Agreement shall be binding upon the
parties until a more formal detailed agreement is
(Inwald Aff. Ex. D)
Angelou's version of the events that preceded placement of her signature on the Letter is as follows: During the late summer or early autumn of 1994, Lewis met with Angelou at her home in Winston-Salem, North Carolina to solicit her interest in a business arrangement involving the licensing of Angelou's' writings for use in greeting cards and related products. Angelou disclaimed any interest in such a business venture, but said she would consider such an arrangement with Lewis in order to assist him in achieving his expressed goal of changing his life by leaving the business of prize fight promotion and engaging in other business.
On or about September 1, 1994, Lewis sent a draft letter agreement between BLP and Angelou to Robert W. Brown, a personal friend of Angelou's. Brown determined that the letter contained provisions that would be unacceptable to Angelou, including a provision pursuant to which the copyrights to certain literary works would be owned by the joint venture between Angelou and BLP rather than by Angelou. On or about October 13, 1994, Brown sent Lewis proposed written revisions to the draft on behalf of Angelou that addressed these and other problems. Lewis agreed to the proposed changes and promised to incorporate them into the agreement. In reliance on Lewis's assurances, Brown advised Angelou that an agreement in principle had been reached with Lewis. In fact, as Angelou now sees it, Lewis made only minor changes to the draft. He did not make any of the material changes proposed by Brown, and did not send further drafts to Brown. On or about November 22, 1994, Lewis presented Angelou with the Letter, falsely assuring her that it was in the form approved by Brown. Angelou signed the Letter. (See Am. Answer and Countercls. ¶¶ 50-56; Angelou's Reply 56.1 ¶¶ 6-7)
Lewis admits that he sent Brown a draft agreement and that Brown proposed changes to the agreement. However, he claims the changes he made to the Letter were consistent with Brown's recommendations. He asserts also that Angelou read the Letter and assented to its terms before signing it, and that Angelou understood when she signed the agreement that BLP would pursue a license agreement with a card or calendar company to use her literary works. (See Reply to Am. Countercls. ¶¶ 5-8; BLP's Hallmark 56.1 ¶ 2)
Angelou concedes that she read the Letter before she signed it. (See Eisenstein Decl. Ex. 1, Angelou Dep. at 31-32) However, she says she did not agree with BLP on the terms of the Letter, including the term whereby Angelou would assign the rights to her literary works to a joint venture. (Angelou's Reply 56.1 ¶ 6; Inwald Suppl. Aff. Ex. B, Angelou Aff. ¶¶ 3-6) Angelou says also that she signed the Letter in reliance on Lewis's assurance that it was in the form approved by Brown, and that, had she known the document was not in that form, she would not have signed it. (Angelou's Reply 56.1 ¶ 6; Inwald Suppl. Aff. Ex. B, Angelou Aff. ¶¶ 3-6)
B. Lewis's Dealings with Hallmark
Between 1994 and 1997, BLP negotiated with Hallmark on Angelou's behalf. (Angelou's 56.1 ¶ 7; BLP's 56.1 ¶ A.7; Hallmark's 56.1 ¶ 10) In March 1995, Hallmark contacted Helen Brann, Angelou's long-time literary agent. Hallmark's representative explained that "we have been working with Butch Lewis who is representing himself as Ms. Angelou's agent for her `new' writings," and requested Brann's direction as to the licensing of Angelou's previously-published writings. (Hallmark's 56.1 ¶ 13; BLP's 56.1 ¶ A.13) Hallmark claims that Brann said she did not know who Lewis was. (Hallmark's 56.1 ¶ 14)
During the Spring of 1996, Hallmark asked for proof that Lewis had authority to act on Angelou's behalf. (Hallmark's 56.1 ¶ 15; BLP's 56.1 ¶ A.15) Lewis did not show the Letter to Hallmark. (Hallmark's 56.1 ¶ 16; BLP's ¶ A.16) Instead, on June 19, 1996, Maya Angelou sent a letter to BLP that said: "This will confirm that Butch Lewis Productions, Inc. (BLP) has the exclusive right to represent Dr. Maya Angelou for the exploitation of her work product in the area of greeting cards, stationery, calendars, etc. as per the contract executed by BLP and Dr. Angelou dated November 22, 1994 which is still in full force and effect." (Inwald Aff. Ex. E) BLP delivered Angelou's letter to Hallmark. (Hallmark's 56.1 ¶ 18; BLP's 56.1 ¶ A.18)
The negotiations between BLP and Hallmark resulted in a draft license agreement (the "Proposed License Agreement") between Hallmark and Angelou. (Angelou's 56.1 ¶ 7; BLP's 56.1 ¶ A.7; Hallmark's 56.1 ¶ 21) On March 2, 1997, Hallmark sent the Proposed License Agreement to Lewis with a cover letter that said: "Enclosed please find . . . execution copies of the Maya Angelou License Agreement. . . . Please execute each of the three originals and upon countersignature by Hallmark Cards, I will issue an advance check for $50,000."*fn1 (Inwald Aff. Ex. F) The Proposed License Agreement specified that "the only rights granted [to Hallmark] herein are those of future intellectual works Dr. Angelou will specifically create for this venture and shall not include rights to any of Dr. Angelou's prior works." (Id. at 1) The Proposed License Agreement specified also that the agreement would last from March 1, 1997 to December 31, 2000. (Id. at 4)
On April 9, 1997, Lewis and Joy Farrell visited Angelou and Brown in North Carolina to discuss the Proposed License Agreement. (BLP's 56.1 ¶ B.9; Eisenstein Decl. Ex. 1, Angelou Dep. at 252) According to BLP, Lewis and Farrell then met with Brann in New York, and Brann promised to discuss the Proposed License Agreement with Angelou and get back to BLP about it. (BLP's 56.1 ¶ B.9) In a letter dated May 5, 1997, Brann told Lewis that "it is not going to work out now for Dr. Maya Angelou to make any deal with Hallmark Cards." (See Weiner Aff. Ex. V) Brann cited Angelou's "unique and long-lasting" relationship with Random House and a recently completed deal with Random House for Angelou's future work as reasons why Angelou would not enter into an agreement with Hallmark. (Id.) The Proposed License Agreement was never executed. (Inwald Aff. Ex. F, at 7)
BLP asserts that, after receiving the Letter from Brann, Lewis met with Angelou, who said she would deal with the Hallmark license agreement after the New Year in 1998. (BLP's 56.1 ¶ B.14) In February 1998, BLP claims that Angelou told Lewis that "as soon as she gets everything off her table . . . she would sign the [Hallmark] deal and be prepared to move forward." (BLP's 56.1 ¶ 15; Inwald Aff. Ex. I, Lewis Dep. at 149-50) BLP claims further that Lewis attempted to get Angelou to sign the licensing agreement one last time in 1999, but got the same response. (BLP's 56.1 ¶ 16; Weiner Decl. Ex. E, Decl. of Butch Lewis ¶ 17)
C. Angelou's Agreement with Hallmark
Angelou claims that, after the meeting on November 22, 1994 at which Angelou signed the Letter, Lewis, accompanied by Farrell, returned to North Carolina with prototype greeting cards and sample drawings. The cards displayed by Lewis depicted caricatures of African Americans. According to Angelou, she found the images distasteful and did not want to be associated with them. She thought that Lewis did not understand her or her work. (Weiner Aff. Ex. S, Second Angelou Aff. ¶¶ 2-3)
Both Angelou and Hallmark claim further that Lewis engaged in "inappropriate and offensive behavior" during a March 1997 reception in Las Vegas. Thereafter, Angelou told Lewis that she was no longer interested in having a business relationship with him. (Weiner Aff. Ex. S, Angelou Second Aff. ¶ 5; Hallmark's 56.1 ¶ 24)
In 1997, at around the time BLP received the Proposed License Agreement from Hallmark, BLP prepared a draft of a Joint Venture Agreement (the "Draft Agreement") between BLP and Angelou that was never executed. (See Inwald Aff. Ex. H) The Draft Agreement, the terms of which mirror most of the Letter's terms, provided, inter alia, that "[t]he parties agree that the subject Agreement is the `more formal detailed agreement' that is referred to in the Letter Agreement dated November 22, 1994 between the parties and shall supersede same upon execution of this document." (Id. at 1)
In a March 31, 1998 letter from Hallmark Account Representative Lisa Aquino to Brann, Aquino expressed disappointment that the discussions with Lewis had ended in early 1997 and stated that "[w]e are still very interested in collaborating with Dr. Angelou on our Hallmark products." (Weiner Aff. Ex. Y) The next day, Brann responded by letter: "I am sorry to report that Dr. Maya Angelou does not want to enter into any Hallmark agreement at this time. . . . [H]er extensive publishing program at Random House precludes any such possibility." (Weiner Aff. Ex. Z)
By letter dated June 16, 1999, Angelou's North Carolina counsel wrote to Lewis: "On behalf of Dr. Maya Angelou, we hereby give formal notice that any business relationship that you have had or contemplated pursuant to a letter dated November 22, 1994 from you to Dr. Angelou, has been terminated." (Weiner Aff. Ex. U) BLP claims it never received the letter from Angelou's counsel. (BLP's Hallmark 56.1 ¶ B.10) BLP claims further that the letter was the culmination of a "strategy to bring closure to the Lewis matter" devised by Angelou, her adviser Bob Brown, and her family friend Amelia Parker in the Spring of 1999. (BLP's Hallmark 56.1 ¶ B.9-B.10)
BLP's version of the events leading up to the June 16, 1999 letter is as follows: Marquetta Glass of Hallmark heard from Amelia Parker in April 1999 that Angelou might work with Hallmark. (Id. ¶ B.3) Glass knew that Karen Mitchall-Layton of Hallmark had been dealing with Butch Lewis since 1995. (Id. ¶ B.4) However, she did not contact Mitchell-Layton or Lewis. (Id. ¶¶ B.5-B.6) Instead, Glass told Parker, who reported to Angelou, that dealing with Lewis had caused "a tidal wave of angst." (Id. ¶ B.7; Eisenstein Decl. Ex. 16, at 5) In May 1999, Parker and Glass exchanged letters discussing the proposed partnership between Angelou and Hallmark. (BLP's Hallmark 56.1 ¶ B.8; Eisenstein Decl. Exs. 10, 16) In anticipation of Angelou's meeting with Hallmark that led to the June 2000 license agreement between Angelou and Hallmark, Angelou and her advisers conceived of a "strategy to bring closure to the Lewis matter" in the form of the letter to Lewis. (BLP's Hallmark 56.1 ¶ B.9)
One week before the June 16, 1999 letter to Lewis, Angelou met with Hallmark representatives in Kanasas City, Missouri. (BLP's Hallmark 56.1 ¶ B.11; Eisenstein Decl. Ex. 1, Angelou Dep. at 273) BLP claims that Karen Mitchell-Layton, the person at Hallmark responsible for determining whether a potential licensor had an agent, was not told of the meeting and first heard of the renewed discussions with Angelou in October 1999. (BLP's Hallmark 56.1 ¶ B.12; Weiner Aff. Ex. J, Mitchell-Layton Dep. at 75) BLP claims further that when Mitchell-Layton asked about Lewis, Glass attacked Lewis and "shut [her] down." (BLP's Hallmark 56.1 ¶¶ 13-14; Weiner Aff. Ex. J, Mitchell-Layton Dep. at 77-78)
Angelou entered into a licensing agreement with Hallmark in June 2000. (See Weiner Aff. Ex. CC) Among other things, the agreement grants Hallmark the exclusive right to use both Angelou's new and her previously published literary works in connection with greeting cards and other specified products. (Id. ¶ 2(a)) The agreement guarantees Angelou an advance twenty times as large as the advance offered earlier to BLP and Angelou. (BLP's Hallmark 56.1 ¶ 19) BLP had no role in the discussions leading up to the June 2000 license agreement. (Hallmark's 56.1 ¶ 37; BLP's Hallmark 56.1 ¶ A.37) However, Hallmark has not prevented BLP from receiving any payment pursuant to the purported joint venture agreement between BLP and Angelou. (Hallmark's 56.1 ¶ 40)
BLP brings two claims against Angelou. First, BLP alleges that Angelou, by entering into a licensing agreement with Hallmark, breached the fiduciary duty she owed to BLP arising from the joint venture agreement. (Compl. ¶¶ 29-31) Second, BLP alleges that Angelou breached the joint venture agreement and the implied obligation of good faith and fair dealing contained therein. (Id. ¶¶ 33-34) BLP also brings two claims against Hallmark. First, BLP alleges that Hallmark knowingly induced Angelou to breach her joint venture agreement with BLP. (Id. ¶ 36) Second, BLP alleges that Hallmark aided and abetted Angelou in her breach of fiduciary duty. (Id. ¶ 39)
Angelou counterclaims against BLP and Butch Lewis. First, Angelou seeks a declaration that the Letter was fraudulently procured by BLP and Lewis; that the Letter was the product of a unilateral mistake; that the Letter is not an enforceable agreement between the parties; and that whatever agreement existed was terminated. (Am. Answer and Countercls. ¶¶ 72-74) Second, Angelou seeks to enjoin BLP and Lewis from, inter alia, representing that BLP is a joint venturer with Angelou. (Id. ¶ 76) Finally, Angelou seeks damages from BLP and Lewis.
Angelou moves for a summary dismissal of BLP's breach of fiduciary duty and breach of contract claims against her on the sole ground that the Letter was not enforceable as a joint venture agreement.*fn2 Hallmark joins in Angelou's motion, asking the court to dismiss the tortious interference and aiding and abetting claims on the same ground. Hallmark also moves for summary judgment on the alternative grounds (i) that Hallmark had no knowledge of the purported joint venture agreement between Angelou and BLP; (ii) that Hallmark did not induce Angelou's purported breach of that agreement; and (iii) that Hallmark's conduct has not damaged Lewis. Finally, BLP and Lewis move for summary judgment dismissing Angelou's fraud counterclaim because Angelou, having read and signed the Letter, cannot establish fraud. BLP and Lewis also move for summary dismissal of Angelou's unilateral mistake claim, arguing that the claim is insufficiently precise and that, in any event, unilateral mistake alone is an insufficient basis for reformation or rescission of a contract.
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). The movant for summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion" and identifying which materials "demonstrate the absence of genuine issues of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once this showing has been made, the burden shifts to the non-movant who "must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).
Hallmark and BLP assume that New York law governs BLP's claims against Hallmark. Such "implied consent . . . is sufficient to establish choice of law." Tehran-Berkeley Civil & Envtl. Eng'rs v. Tippetts-Abbett-McCarthy-Stratton, 888 F.2d 239, 242 (2d Cir. 1989). On the other hand, although BLP contends that New York law governs its claims against Angelou as well as Angelou's counterclaims, Angelou argues that North Carolina law governs those claims. Thus, the threshold question is whether New York or North Carolina law governs the dispute between BLP and Angelou.
A federal court sitting in diversity must apply the choice of law rules of the forum state. Tri State Employment Servs., Inc. v. Mountbatten Sur. Co., Inc., 295 F.3d 256, 260 (2d Cir. 2002) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Under New York law, the first step in addressing choice of law is to determine whether there is a material conflict between the laws of the jurisdictions involved. See In re Allstate Ins. Co., 81 N.Y.2d 219, 223, 597 N.Y.S.2d 904, 905 (1993). If there is no material conflict, "[a] court is free to bypass the choice of law analysis and apply New York law." Simon v. Philip Morris Inc., 124 F. Supp.2d 46, 71 (E.D.N.Y. 2000) (citing Curley v. AMR Corp., 153 F.3d 5, 12 (2d Cir. 1998)); see also Ciaramella v. Reader's Digest Assoc'n, Inc., 131 F.3d 320, 322 (2d Cir. 1997) (declining to settle the choice of law issue where "there is no material difference between the applicable state law or federal common law standard"); Park Place Entm't Corp. v. Transcontinental Ins. Co., No. 01 Civ. 6546, 2003 WL 1913709, at *2 (S.D.N.Y. Apr. 18, 2003) (concluding that "if the party advocating a choice of law analysis fails to demonstrate an actual conflict between New York and another state's laws, no choice of law analysis need be undertaken").
BLP and Angelou both contend that there is no material difference between New York and North Carolina law with respect to the issues posed by their motions. As appears below, that is accurate. Therefore, I need not conduct the choice of law analysis that would be required if there were a material conflict.
In Teachers Ins. & Annuity Ass'n v. Tribune Co., 670 F. Supp. 491, 497-98 (S.D.N.Y. 1987), Judge Leval articulated a framework for analyzing whether a preliminary agreement is binding. The Second Circuit applied that framework in Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 71-72 (2d Cir. 1989), and, more recently, in Adjustrite Sys., Inc. v. GAB Bus. Servs., Inc., 145 F.3d 543, 547-48 (2d Cir. 1998).
Based on his survey of the New York case law on preliminary agreements, Judge Leval concluded that there is a "strong presumption against finding binding obligations in agreements which include open terms, call for future approvals and expressly anticipate future preparation and execution of contract documents." Tribune, 670 F. Supp. at 499. That presumption exists because "[a] primary concern for courts . . . is to avoid trapping parties in surprise contractual obligations that they never intended." Id. at 497.
At the same time, "it is equally important that courts enforce and preserve agreements that were intended to be binding, despite a need for further documentation or further negotiation." Id. at 498. Thus, under some circumstances, preliminary agreements can create binding obligations. In Tribune, Judge Leval identified two types of binding preliminary agreements, described in Adjustrite as follows:
The first is a fully binding preliminary agreement,
which is created when the parties agree on all the
points that require negotiation (including whether to
be bound) but agree to memorialize their agreement in
a more formal document. Such an agreement is fully
binding; it is "preliminary only in form — only in
the sense that the parties desire a more elaborate
formalization of the agreement." Tribune,
670 F. Supp. at 498. A binding preliminary agreement binds
both sides to their ultimate contractual objective in
recognition that, "despite the anticipation of
further formalities," a contract has been reached.
Id. Accordingly, a party may demand performance of
the transaction even though the parties fail to
produce the "more elaborate formalization of the
agreement." Id.; see generally Arcadian, 884 F.2d
The second type of preliminary agreement, dubbed a
"binding preliminary commitment" by Judge Leval, is
binding only to a certain degree. It is created when
the parties agree on certain major terms, but leave
other terms open for further negotiation. The parties
"accept a mutual commitment to negotiate together in
good faith in an effort to reach final agreement."
Tribune, 670 F. Supp. at 498. In contrast to a fully
binding preliminary agreement, a "binding preliminary
commitment" "does not commit the parties to their
ultimate contractual objective but rather to the
obligation to negotiate the open issues in good faith
in an attempt to reach the . . . objective within the
agreed framework." Id.
Adjustrite, 145 F.3d at 548.
BLP claims that the Letter was a fully binding preliminary agreement under either New York or North Carolina law. Angelou retorts that, under either body of law, the Parties did not intend to enter into such an agreement and that, in any event, the agreement lacks essential terms. With respect to the intent of the parties, I do not agree with Angelou. The parties showed an intent to be bound by the terms of the Letter or, at the very least, there is an issue of material fact as to their intent. However, because the Letter lacks terms essential to a joint venture agreement, it is unenforceable.
A. Intent to Be Bound: New York Law
The Second Circuit has identified four factors to be considered in determining whether parties intended to enter into a fully binding preliminary agreement. They are: 1) the language of the agreement;*fn3 (2) whether all the terms of the alleged contract have been agreed upon; (3) whether there has been partial performance of the contract; and (4) whether the agreement at issue is the type of contract that is usually committed to writing. Adjustrite, 145 F.3d at 549.
The language of a preliminary agreement is the most important factor in determining whether the parties intended to be bound by its terms. Adjustrite, 145 F.3d at 549; Arcadian, 884 F.2d at 72. In Tribune, Teachers sent a letter to Tribune that provided, among other things, that "[u]pon receipt by [Teachers] of an accepted counterpart of this letter, our agreement to purchase from you and your agreement to issue, sell and deliver to us . . . the captioned securities, shall become a binding agreement between us." Tribune, 670 F. Supp. at 499. In signing, Tribune used the words "accepted and agreed to" and, in its additional letter of acceptance, Tribune's agent wrote: "Attached is an executed copy of the Commitment Letter . . . for a $76 million loan." Id.
Based on the language of the letters, which were "replete with the terminology of binding contract," id., Judge Leval concluded that the parties intended to enter into a contract of preliminary commitment. Rejecting Tribune's contention that the "binding agreement" language should not be given full effect, Judge Leval noted that "a party that does not wish to be bound at the time of the preliminary exchange of letters can very easily protect itself by not accepting language that indicates a `firm commitment' or `binding agreement.'" Id.
Judge Leval found the preliminary commitment enforceable notwithstanding that in Tribune's additional letter of acceptance, Tribune's Vice President wrote: "Our acceptance and agreement is subject to approval by the Company's Board of Directors and the preparation and execution of legal documentation satisfactory to the Company." Id. at 494. Judge Leval explained that reservations such as Tribune's will defeat enforcement of a letter as a fully binding preliminary agreement, but not as a preliminary commitment. See Tribune, 670 F. Supp. at 500 (emphasizing that, where the plaintiff attempts to enforce a preliminary agreement as a binding preliminary commitment rather than as a fully binding preliminary agreement, the "inquiry is not whether the parties had concluded their deal, but only whether they had entered into a binding preliminary commitment which required further steps").
In this case, BLP claims that the Letter is a fully binding preliminary agreement. Crucially, the Letter contains none of the reservations or conditions contained in the Tribune letters. The Letter, which consists of a series of terms describing the parties' rights and obligations, ends with an unambiguous statement of an intent to be bound: "This Agreement shall be binding upon the parties until a more detailed agreement is signed." (Inwald Aff. Ex. D, at 2) Although the Letter refers to a more detailed agreement to be signed in the future, "[t]he mere fact that the parties contemplate memorializing their agreement in a formal document does not prevent their informal agreement from taking effect prior to that event." V'Soske v. Barwick, 404 F.2d 495, 499 (2d Cir. 1968); accord Conopco, Inc. v. Wathne Ltd., 190 A.D.2d 587, 588, 593 N.Y.S.2d 787, 787 (1st Dep't 1993). Indeed, courts applying New York law have found that language less direct than the language at issue is sufficient to convey an intent to be bound. See Vacold LLC v. Cerami, No. 00 Civ. 4024, 2002 U.S. Dist. LEXIS 1895, at *12-15 (S.D.N.Y. Feb. 6, 2002) (concluding that a letter agreement was fully binding even though the letter contained no express statement that it was binding and despite some conditional language); Keis Distribs., Inc. v. Northern Distrib. Co., 226 A.D.2d 967, 968-69, 641 N.Y.S.2d 417, 419-20 (3d Dep't 1996) (enforcing a preliminary agreement even though the plaintiff suggested in its acceptance that the parties retain counsel to work out the wording of the final details).
Angelou cites an array of cases in which the Second Circuit and courts in this district have concluded, based in whole or in part on the language of preliminary agreements, that those agreements were unenforceable as a matter of law. However, in those cases, unlike in Tribune, the defendants expressly reserved the right not to be bound absent a later writing. In Arcadian, the plaintiffs asserted breach of contract claims based on a memorandum describing the sale of a company's phosphate fertilizer business to a joint venture. Applying the language of that memorandum only, the Second Circuit concluded that it was not binding. The Court noted that, unlike in Tribune, the agreement did not describe itself as "binding." Also, the agreement contained two references to the possibility that negotiations to reach an agreement might fail as well as a reference to a separate sales agreement to be completed at a later date. Arcadian, 884 F.2d at 72-73. Similarly, in Adjustrite, the defendant ITS sent the plaintiff Adjustrite a two-page proposal offering to purchase some of its assets, which Adjustrite signed. The Court concluded, based on the language of the preliminary agreement alone, that no binding contract existed. The Court noted that the proposed agreement did not describe itself as binding, that the document was entitled a "proposal," and that it stated merely that the buyer "desires" to buy the seller's assets. Also, the agreement was expressly contingent, in part, on the execution of a separate sales contract. See Adjustrite, 145 F.3d at 549-50.*fn4
As in Tribune, and in contrast to Adjustrite and Arcadian, the purported joint venture agreement in this case specifically describes itself as binding, and contains no conditions or reservations. In light of the Letter's plain language, I must conclude that Angelou and BLP intended to be bound by it terms.
B. Intent to Be Bound: North Carolina Law
With respect to the intent of the parties, North Carolina law compels the same result. Like New York courts, North Carolina courts have refused to enforce preliminary agreements that do not reflect an intent to be bound. In the leading North Carolina case on agreements to agree, the Court of Appeals refused to enforce a land sale agreement that was prefaced with the following statement: "Whereas the Owner and Developer . . . desire to enter into a preliminary agreement setting out the main features as to the desires of both parties and to execute a more detailed agreement at a later date." Boyce v. McMahan, 206 S.E.2d 496, 497 (N.C. Ct. App. 1974). The Court of Appeals reasoned:
[T]he above quoted paper writing makes it perfectly
clear that the parties intended it to be a
preliminary statement of their desires or objectives.
It is certainly obvious that the paper writing is not
sufficiently specific to be the basis for a decree of
specific performance. Even if the parties had
intended this document to be a final agreement, the
document would not be enforceable, for the parties
have expressly made it subject to a "more detailed
agreement at some specific date to be agreed to by
the parties hereto."
Id. at 498-99. The Supreme Court of North Carolina affirmed. The Supreme Court concluded that the agreement was insufficiently definite because it contemplated further negotiation. See Boyce v. McMahan, 208 S.E.2d 692
, 695 (N.C. 1974) (noting that "a contract . . . leaving material portions open for future agreement is nugatory and void for indefiniteness" and finding that the preliminary agreement was indefinite because it "expresse[d] the desires of the parties but not the agreement of both").*fn5
Like Adjustrite and Arcadian, Boyce is distinguishable from this case, because the preliminary agreement in Boyce did not describe itself as binding; rather, the agreement was "expressly subject" to a more detailed agreement to be negotiated at a later date. Boyce, 206 S.E.2d at 499. Here, by contrast, although BLP and Angelou anticipated a more formal agreement, they specifically stated that the Letter was binding until such an agreement was reached.
North Carolina Nat. Bank v. Wallens, 217 S.E.2d 12 (N.C. App. 1975) is directly on point. That case, like Boyce, involved a preliminary agreement that contemplated a more formal agreement in the future. However, unlike Boyce but like the case at hand, the parties expressly agreed to be bound until they reached a more formal agreement. The Court enforced the preliminary agreement. It reasoned:
Clearly, if the parties in the present case had
manifested an intent not to become bound until the
execution of a more formal agreement or document,
then such an intent would be given effect. However,
they stated that the writing would serve as an
agreement until "proper complete documents" could be
drawn. From such language it cannot be said that
execution of a later agreement was a condition
precedent to any contractual rights which might
Id. at 15. The Court distinguished Boyce, see id. ("By its own terms, the writing in Boyce was incomplete and subject to Supplementation by a more Detailed agreement."), and refused to frustrate the parties' express desire to be bound by their preliminary agreement.
In Tribune, Judge Leval noted that the existence of open terms is an indication that the parties did not intend to enter into a fully binding preliminary agreement. See Tribune, 670 F. Supp. at 502. Yet Judge Leval explained also that, notwithstanding the parties' intent to enter into a binding agreement, "if a contract fails to include agreement on basic terms of prime importance, it can be considered a nullity." Id. at 501; see also Durante Bros. & Sons, Inc. v. Flushing Nat'l Bank, 755 F.2d 239, 252 (2d Cir. 1984) ("There is no enforceable agreement if the parties have failed to agree on all of its essential terms or if some of the terms are too indefinite to be enforceable."); accord Williamson v. Miller, 58 S.E.2d 743, 747 (N.C. 1950) (alleged distribution contract too vague to be enforceable where essential terms were missing).
A. Joint Ventures: New York Law
BLP asserts that the Letter is an enforceable joint venture agreement under New York law and that Angelou therefore owed BLP a duty of loyalty. See Zeising v. Kelly, 152 F. Supp.2d 335, 347 (S.D.N.Y. 2001) ("Principles of partnership law control the analysis of joint venture agreements, and, coventurers, like co-partners, owe each other the finest loyalty and the utmost good faith throughout the course of the enterprise."). Angelou retorts that the Letter lacks essential terms. Here, I agree with Angelou.
The Second Circuit, applying New York law, has outlined the requirements for a joint venture agreement:
In order to form a joint venture, (1) two or more
persons must enter into a specific agreement to carry
on an enterprise for profit; (2) their agreement must
evidence their intent to be joint venturers; (3) each
must make a contribution of property, financing,
skill, knowledge, or effort; (4) each must have some
degree of joint control over the venture; and (5)
there must be a provision for the sharing of both
profits and losses.
ITEL Containers Int'l Corp. v. Atlanttrafik Express Serv., Ltd., 909 F.2d 698
, 701 (2d Cir. 1990). If an agreement lacks any one of these elements, it is unenforceable as a joint venture, Dinaco, Inc. v. Time Warner Inc., No. 98 Civ. 6422, 2002 U.S. Dist. LEXIS 20173, at *5 (S.D.N.Y. Oct. 22, 2002), notwithstanding the label that the parties attach to the agreement, US Airways Group v. British Airways PLC, 989 F. Supp. 482, 493 (S.D.N.Y. 1997). The Letter lacks a necessary element: that the parties agree to share losses.
"An indispensable essential of a contract of . . . joint venture . . . is a mutual promise or undertaking of the parties to share in the profits of the business and submit to the burden of making good the losses." Steinbeck v. Gerosa, 4 N.Y.2d 302, 317, 175 N.Y.S.2d 1, 13 (1958); see also Andrews v. Cerberus Partners, 271 A.D.2d 348, 707 N.Y.S.2d 85 (1st Dep't 2000) (lack of agreement on sharing of losses is fatal to assertion of joint venture); Davella v. Nielsen, 208 A.D.2d 494, 616 N.Y.S.2d 800 (2d Dep't 1994) (same). As a business with minimal start-up costs, it is probable that BLP and Angelou's venture would not have incurred substantial liabilities. Nevertheless, nothing prevented the venture from experiencing losses, including losses arising out of civil lawsuits for breach of contract or copyright infringement, to cite two obvious examples. Because BLP and Angelou did not agree to share those losses, they did not enter into an enforceable joint venture agreement under New York law.
BLP does not dispute that joint venturers in New York must agree to share losses. Instead, BLP argues that that requirement was met in this case because both Angelou and BLP stood to lose the value of their respective contributions to the joint venture. That argument does not withstand scrutiny.
If BLP were correct that adding value to a commercial enterprise is sufficient to satisfy the requirement that joint venturers share losses, that requirement would be indistinguishable from the separate requirement imposed by New York law that each joint venturer make some contribution of property, financing, skill, knowledge, or effort to the venture. Yet numerous courts have found that, although a party makes a contribution to a commercial enterprise, that party has not entered into a joint venture if it has not consented to share losses. In Steinbeck, for example, the author John Steinbeck claimed that his royalty agreements with his publishers created joint ventures. The Court of Appeals held that, although the royalty arrangements evidenced a sharing of profits, no joint venture existed because the parties did not agree to share losses. Steinbeck, 4 N.Y.2d at 317, 175 N.Y.S.2d at 13; see also Kosower v. Gutowitz, No. 00 Civ. 901, 2001 WL 1488440, at *6 (S.D.N.Y. Nov. 21, 2001) (dismissing a breach of contract claim where the plaintiff failed to allege that he and his partner agreed to share losses and rejecting the contention that merely working for the partnership satisfied the requirement); Artco, Inc. v. Kiddie, Inc., No. 88 Civ. 5734, 1993 WL 962596, at *10 (S.D.N.Y. Dec 28, 1993) (relying on Steinbeck to conclude "that putting one's efforts and time at risk [is] not enough to show an agreement to bear losses"); De Vito v. Pokoik, 150 A.D.2d 331, 331, 540 N.Y.S.2d 858, 859 (2d Dep't 1989) (finding no joint venture where there was no agreement to share losses and noting that "[a]n individual who has no proprietary interest in a business except to share the profits as compensation for services is not a joint venturer").*fn6 Because BLP and Angelou did not agree to share losses, they did not enter into an enforceable joint venture agreement. I need not decide whether the other elements of a joint venture in New York were satisfied.*fn7
B. Joint Ventures: North Carolina Law
Under North Carolina law as well, the Letter is unenforceable as a joint venture agreement. The leading North Carolina case on joint ventures is Pike v. Trust Co., 161 S.E.2d 453, (N.C. 1968). In that case, the Supreme Court of North Carolina quoted with approval from In re Simpson, 222 F. Supp. 904 (M.D.N.C. 1963), as follows:
A joint venture is an association of persons with
intent, by way of contract, express or implied, to
engage in and carry out a single business adventure
for joint profit, for which purpose they combine
their efforts, property, money, skill, and knowledge,
but without creating a partnership in the legal or
technical sense of the term.
Facts showing the joining of funds, property, or
labor, in a common purpose to attain a result for the
benefit of the parties in which each has a right in
some measure to direct the conduct of the other
through a necessary fiduciary relation, will justify
a finding that a joint adventure exists.
To constitute a joint adventure, the parties must
combine their property, money, efforts, skill, or
knowledge in some common undertaking. The
contributions of the respective parties need not be
equal or of the same character, but there must be
some contribution by each coadventurer of something
promotive of the enterprise.
Pike, 161 S.E.2d at 460 (quoting In re Simpson, 222 F. Supp. at 909) (internal quotation marks omitted).
Thus, under North Carolina law, "the essential elements of a joint venture are (1) an agreement, express or implied, to carry out a single business venture with joint sharing of the profits,*fn8 (2) with each party to the joint venture having al right in some measure to direct the conduct of the other `through a necessary fiduciary relationship.'" Southeastern Shelter Corp. v. BTU, Inc., 572 S.E.2d 200, 204 (N.C. Ct. App. 2002) (quoting Cheape v. Town of Chapel Hill, 359 S.E.2d 792, 799 (N.C. 1 87). To satisfy the second element, the parties to a joint venture must have "`an equal right of control of the means employed to carry out the venture.'" Id. at 204 (quoting Rhoney v. Fele, 518 S.E.2d 536, 541 (N.C. Ct. App. 1999) (emphasis in original)).
North Carolina courts have enforced strictly the requirement that parties to a joint venture have joint and equal control over the means employed to carry out a purported venture. In Cheape, for example, the Supreme Court of North Carolina affirmed the trial court's grant of summary judgment dismissing a claim that an agreement between the town of Chapel Hill and a developer created a joint venture for a nonpublic purpose in violation of the North Carolina Constitution. The Court concluded that the agreement at issue did not establish a principal/agent relationship between the Town and the developer because neither the Town nor the developer had the authority to direct the conduct of the other. The Town had no such authority because "[u]nder the development agreement, [the developer] alone controls the means for constructing the private improvements; the Town has a limited right to approve the final plans." Cheape, 359 S.E.2d at 800. The developer had no such authority because "the agreement gives [him] no right to exercise any control over those portions of the public improvements that are performed by the Town's Public Works Department, and does not require the Town to undertake any action on Fraser's behalf." Id.
Similarly, in Southeastern Shelter, the Court of Appeals of North Carolina affirmed the trial court's grant of summary judgment dismissing the plaintiff's claim that an asset purchase agreement constituted a joint venture. In exchange for compensation, the plaintiffs in Southeastern Shelter agreed to provide knowledge, experience, goodwill, proprietary information, and assets to enable the defendants to learn and enter the fireproofing business. See Southeastern Shelter, 572 S.E.2d at 203. The Court concluded that the parties' agreement was not a joint venture because, inter alia, it did not establish a principal-agent relationship between the parties. The Court explained that, although the plaintiffs assisted the defendants in making bids on contracts, they could not make bids on behalf of the defendants, and therefore could not act on behalf of the venture. Id. at 205.
Lewis admits that he could not compel Angelou to contribute literary works to the joint venture or to contribute any particular amount of work to the venture. (See Inwald Aff. Ex. I, Lewis Dep. at 27-31 (stating, inter alia, that "[n]o matter what I think, unless Maya were to agree, there's nothing that can happen" and agreeing that Angelou would be obligated to contribute a specific piece of work to the venture "if and only if [she] agreed to do so"). Without the power to compel Angelou to supply property to the venture, BLP could not make an agreement on behalf of the venture. Instead, as the Hallmark example shows, BLP had to negotiate potential deals with third parties and then attempt to sell those deals to Angelou. Like the plaintiffs in Southeastern Shelter, BLP lacked equal control over the venture because it could not bind the venture without another party's consent.
BLP seeks to blunt the force of Lewis's admission that he could not exercise control over Angelou by arguing that Angelou, as an exclusive supplier of literary works to the purported joint venture, had an implied duty to supply works to the venture. According to BLP, because Angelou had an implied obligation not to deprive BLP of the benefits of its bargain, BLP effectively controlled the venture's supply of literary works.
BLP's argument proves too much. If the implied covenant of good faith and fair dealing that is endemic to contracts, see, e.g., Bicycle Transit Authority v. Bell, 333 S.E.2d 299, 305 (N.C. 1985), were sufficient to establish joint control, then any contract that meets all of the requirements for a joint venture — besides joint control — would be a joint venture. In short, to accept BLP's reasoning would be to abrogate the joint control requirement. Angelou and BLP never entered into an enforceable joint venture agreement in the first instance; their unenforceable agreement could not generate an implied duty of good faith.
C. The Breach of Contract Claim
BLP does not argue that the Letter is enforceable as an exclusive agency agreement even if it is not enforceable as a joint venture agreement, nor could it. The Letter contains several provisions that would be inconsistent with or at least extraneous to an exclusive agency agreement. Aside from the Letter's express statement that it is intended to create a joint venture, the Letter (i) spells out how the venture will raise capital; (ii) states that the venture — not Angelou — will own the copyrights to Angelou's works once she decides to contribute to the venture; and (iii) explains how the venture's revenue will be divided. In a breach of contract action, "[a] court should not, under the guise of contract interpretation, `imply a term which the parties themselves failed to insert' or otherwise rewrite the contract." Lui v. Park Ridge at Terryville Assn., 196 A.D.2d 579, 581, 601 N.Y.S.2d 496, 498 (2d Dep't 1993) (quoting Mitchell v. Mitchell, 82 A.D.2d 849, 849, 440 N.Y.S.2d 54, 55 (2d Dep't 1981)); accord State ex rel. Utilities Com'n v. Thrifty Call, Inc., 571 S.E.2d 622, 626 (N.C. App. 2002) ("If the language of a contract `is clear and only one reasonable interpretation exists, the courts must enforce the contract as written' and cannot, under the guise of interpretation, `rewrite the contract or impose [terms] on the parties not bargained for and found' within the contract." (quoting Woods v. Nationwide Mut. Ins. Co., 246 S.E.2d 773, 777 (N.C. 1978))). BLP and Angelou framed their relationship as a joint venture. Although they could have entered into an exclusive agency agreement and, indeed, Angelou later characterized BLP as an exclusive agent,*fn9 Angelou and BLP attempted to become joint venturers instead. The Letter cannot be rewritten after the fact so as to rescue BLP's breach of contract claim.
In his deposition, Lewis expressly disavowed any agency relationship between BLP and Angelou besides a joint venture.
Q: Could you show me where, in the letter agreement
dated November 22d 1994 . . . Maya Angelou
appointed B. Lewis Productions as her exclusive agent
for the exploitation of her works?
A: Well, I'm not an agent. This is a joint venture
Q: Okay. Well, where, then, did Maya Angelou agree
that Butch Lewis or B. Lewis Productions was to be
the exclusive agent for Maya Angelou for the
exploitation of her works if it's not in [the
Purported Joint Venture Agreement]?
A: You keep using the term "agent." We were partners.
I wasn't her agent . . . I was never her agent.
Q: When you say you were never her agent, are you
referring to you personally, or to your company?
A: My company.
(Inwald Aff. Ex. I, Lewis Dep. at 36-38) Thus, Lewis himself concedes that the Letter did not create an exclusive agency. Because BLP and Angelou did not form an enforceable joint venture, and because a joint venture is the only type of contract contemplated by both parties, BLP's breach of contract claim is dismissed along with its breach of fiduciary duty claim.
In the absence of an enforceable joint venture agreement, Angelou did not owe BLP a duty of loyalty, and, therefore, Hallmark could not aid and abet Angelou's breach of that duty. Accordingly, BLP's aiding and abetting claim against Hallmark is dismissed.*fn10 Likewise, in the absence of an enforceable contract, Hallmark cannot be held liable for tortious interference with a contract. All claims against Hallmark are dismissed.
Angelou's counterclaims sounding in fraud and unilateral mistake also must be dismissed. Under New York law, a fraud claim requires proof of justifiable reliance on the defendant's alleged misrepresentation. P. Chimento Co. v. Banco Popular de Puerto Rico, 208 A.D.2d 385, 385, 617 N.Y.S.2d 157, 158 (1st Dept. 1994). Thus, "a party is not entitled to recovery when, with the exercise of ordinary care or intelligence, it could have ascertained the true nature of the transaction involved but failed to do so." Id. at 386, 617 N.Y.S.2d at 15859; see also Cohen v. Colistra, 233 A.D.2d 542, 543, 649 N.Y.S.2d 540, 541-42 (3d Dep't 1996) ("[I]f the facts represented are not matters peculiarly within the party's knowledge, and the other party has the means available to him of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation, he must make use of those means, or he will not be heard to complain that he was induced to enter into the transaction by misrepresentation.") (citations and internal quotation marks omitted); Jack Kent Cooke, Inc. v. Saatchi & Saatchi N. Am., 222 A.D.2d 334, 335, 635 N.Y.S.2d 611, 612-13 (1st Dep't 1995) ("One to whom an allegedly false representation is made may not rely thereon if the means of obtaining the truth are available by the exercise of ordinary intelligence.").
In New York, the rule that a plaintiff alleging fraud must exercise ordinary intelligence has specific application to cases in which the plaintiff claims that he or she was induced to sign a written contract by oral representations at variance with the terms of the contract. The Appellate Division has explained that "[w]here . . . a written instrument contains terms different from those orally or otherwise represented, a person is presumed to have read the writing and may not claim that he or she relied on the representations." Lewin Chevrolet-Geo-Oldsmobile v. Bender, 225 A.D.2d 916, 918, 639 N.Y.S.2d 180, 181 (3d Dep't 1996). In this case, because Angelou testified that she read the Letter before signing it, the presumption is unnecessary.
North Carolina law likewise requires a plaintiff alleging fraud to establish justifiable reliance. See Cofield v. Griffin, 78 S.E.2d 131, 133 (N.C. 1953). Thus, as in New York, "when the party relying on the false or misleading representation could have discovered the truth upon inquiry, the complaint must allege that he was denied the opportunity to investigate or that he could not have learned the true facts by exercise of reasonable diligence." Hudson-Cole Dev. Corp. v. Beemer 511 S.E.2d 309, 313 (N.C. Ct. App. 1999).
Angelou's fraud claim rests on her assertion that she signed the Letter in reliance on Lewis's false assurance that he had made the changes to the proposed agreement that had been requested by Brown. Specifically, Angelou says that she never would have signed the Letter had she known that it include a provision purporting to assign to a joint venture ownership of copyrights to her original works.
The plain language of the Letter defeats Angelou's contention that she did not knowingly sign an agreement to transfer the ownership of copyrights. The Letter states, on its first page, that "[t]he Venture shall own the copyrights to all of Angelou's contributions to the Venture." (Inwald Aff. Ex. D, at 1) Angelou, whose chosen field of endeavor would at least suggest some facility in comprehending the meaning of words, admits that she read the Letter before signing it. (See Eisenstein Decl. Ex. 1, Angelou Dep. at 31-32) In view of that admission, no reasonable juror could conclude that she relied on a false representation that the Letter did not assign the ownership of copyrights.
Moreover, although Angelou might be able to establish that she relied on Lewis's assurance that Brown had approved the version of the agreement presented for her signature, Angelou cannot establish that she relied justifiably on that assurance. Courts have concluded that plaintiffs failed to establish justifiable reliance as a matter of law even where substantial effort and expense would be required to investigate an alleged misrepresentation. See Cohen, 233 A.D.2d at 543, 649 N.Y.S.2d at 542 (granting summary judgment on fraud counterclaim where seller falsely represented that residence had adequate water supply and that residence and roof were in good repair on the ground that the plaintiff could have performed a water flow test as well as a structural inspection of the residence); Chimento, 208 A.D.2d at 386, 617 N.Y.S.2d at 159 (affirming dismissal of fraud claim by real estate purchaser who claimed that bank officer misrepresented value of real property because purchaser could have "call[ed] upon the assistance of legal counsel, accountants and real estate experts"). Here, Angelou easily could have found out whether Brown's requested changes were incorporated into the agreement by asking Brown to review the final agreement before she signed it.
Angelou cites only inapposite cases to support her claim that there are material issues of fact concerning her reliance on Lewis's representations. In On Ling Lam v. Wong Woh Lung Co., 181 A.D.2d 495, 581 N.Y.S.2d 308 (1st Dep't 1992), the plaintiff-lessee executed two leases for the same premises and for the same term with two related landlords. The plaintiff, who spoke little English and had already paid $30,000 in "key money" to obtain the first lease, claimed that the lessor-defendant told him not only that the property value had risen but also that he would lose the premises if he did not sign the second lease. Unlike in the present case, therefore, a genuine issue of material fact existed as to whether the plaintiff — who was threatened with eviction if he did not follow the defendant's instructions — relied justifiably on the defendant's misrepresentation. Further, in Shafran v. Kule, 159 A.D.2d 263, 552 N.Y.S.2d 263 (1st Dep't 1990), the Court denied summary judgment because there was a dispute as to whether the defendant was the party responsible for the alleged misrepresentations. The Court did not address the reasonableness of the plaintiff's reliance on the misrepresentations at issue.
Because Angelou could not have relied justifiably on Lewis's alleged misrepresentations, her fraud claim fails. Contrary to Angelou's contention, the fact that I granted her leave to file an amended counterclaim for fraud is irrelevant. The order stated specifically that "[d]efendant's motion to file an amended answer and counterclaim is granted without prejudice to summary disposition at or prior to trial." (Order of Oct. 7, 2002)
Under both New York law and North Carolina law, a unilateral mistake alone is an insufficient basis for rescission or reformation of an agreement absent fraud in the making of the agreement or some other equitable consideration making enforcement unconscionable. See Consumers Union of U.S., Inc. v. Campbell, No. 88 Civ. 7980, 1989 WL 304762, at *5 (S.D.N.Y. Nov. 16, 1989); Surlak v. Surlak, 95 A.D.2d 371, 384, 466 N.Y.S.2d 461, 471 (2d Dep't 1983); Financial Services v. Capitol Funds, 217 S.E.2d 551, 560 (N.C. 1975); Goodwin v. Cashwell, 401 S.E.2d 840, 842 (N.C. App. 1991).
Angelou argues that her unilateral mistake claim is viable because it is accompanied by a fraud claim. However, as discussed above, Angelou has no cognizable fraud claim against Lewis and BLP, as she did not reasonably rely on Lewis's alleged misrepresentations concerning the content of the Letter. Thus, Angelou's counterclaims, to the extent that they are based on a theory of unilateral mistake, are inadequate. See Winmar Co. v. Teachers Ins. & Annuity Ass'n of Am., 870 F. Supp. 524, 537-38 (S.D.N.Y. 1994) (dismissing a reformation claim based on unilateral mistake because the plaintiff could not establish justifiable reliance, which is an essential element of a fraud claim).
Contrary to Angelou's view, Howell v. Waters, 347 S.E.2d 65 (N.C. Ct. App. 1986), does not compel a different result. In that case, the defendant allegedly misrepresented the boundaries of a large tract of land. The Court of Appeals allowed a rescission claim to be heard based on a theory of unilateral mistake because it found that, in light of the size and location of the land, it could not allocate to the purchaser alone the risk of a mistake as to the property's boundaries. Id. Here, by contrast, Angelou could easily have verified the terms of the agreement and yet failed to do so; she assumed the risk of a mistake.
For the reasons stated, Angelou's and Hallmark's motions for summary judgment are granted, as is BLP's and Lewis's cross-motion for partial summary judgment. The complaint is dismissed, as are Angelou's counterclaims for fraud and unilateral mistake.