United States District Court, S.D. New York
January 12, 2004.
CREATIVE TRANSACTION CORPORATION AND AMY LEE, Plaintiffs, -against- MONROE ALLEN PUBLISHERS, INC. AND PHILIP M. RIDEOUT, Defendants
The opinion of the court was delivered by: RICHARD CASEY, District Judge
MEMORANDUM OPINION & ORDER
Creative Transaction Corp. ("CTC") and its President, Amy Lee,
("Plaintiffs") sued Monroe Allen Publishers, Inc. ("MAP") and its
President, Philip M. Rideout, ("Defendants") on various contract and tort
causes of action arising from the parties' effort to publish and sell a
dictionary. Rideout authored the dictionary; Lee provided capital and
assisted Rideout in negotiations with a publishing company, Heinle &
Heinle Publishers ("Heinle"). Successful in these negotiations, MAP and
CTC entered into an agreement with Heinle, by which Heinle would publish
and market the dictionary and would produce a derivative work. During
subsequent negotiations with Heinle concerning Heinle's transfer of its
rights in the dictionaries, relations between Plaintiffs and Defendants
deteriorated; Plaintiffs brought suit on an eight-count complaint as a
Now before the Court are Defendants' motion for summary judgment and
Plaintiffs' motion for partial summary judgment. For the reasons that
follow Plaintiffs' motion is DENIED and Defendants' motion is GRANTED IN
PART AND DENIED IN PART
In 1993, Lee and Rideout, on behalf of their companies, established a
relationship to produce a dictionary entitled A Dictionary of Modern
American English. According to a letter written in November 1993,
that Defendants contend was a contract, Lee invested $27,000 to aid
Rideout in completing his dictionary of modern American English. In
exchange for the capital, Lee was to receive all of the proceeds from the
Asian sales of the dictionary and any derivatives of the primary work.
All other royalties were to go to Rideout. Plaintiffs dispute whether
this letter represented a binding contract between the parties.
Plaintiffs allege that Lee negotiated with Heinle on Rideout's behalf.
In 1994, MAP and Heinle entered into an agreement to publish the
dictionary under the title The Newbury House Dictionary of American
English (the "NHD"). This 1994 agreement assigned all Asian royalties to
CTC. In 1997, the parties reached a second agreement (the "1997
agreement") with Heinle to produce a derivative work called The Basic
Newbury House Dictionary of American English (the "Basic NHD"). The 1997
agreement included both MAP and CTC as the dictionary's "Author."
According to that contract, Heinle agreed "to pay the Author a royalty
based on the net cash received by the publisher from the sale of the
work." (Basic NHD Agreement, Defendants' Notice of Motion, Exh. C, at 1,
In 1998, MAP and CTC entered into another agreement (the "1998
agreement") that gave CTC: (1) the nonexclusive right to create
derivations on the dictionaries for sale in Asia; (2) exclusive rights to
exploit the dictionaries and derivations thereon in Asia; and (3)
exclusive rights to exploit Asian-language derivations of the
dictionaries throughout the world.
Problems began after the 1998 agreement was executed. Lee and Heinle
were negotiating to
transfer any rights Heinle had in the dictionaries in Asia to
Plaintiffs. Rideout, unhappy about being left out of these negotiations,
complained to both Heinle and Lee. Plaintiffs maintain that Defendants
interfered with the negotiations by insisting that Heinle transfer to
Defendants the rights to the dictionaries in the Asian market that
Plaintiffs were attempting to procure from Heinle. As a result,
Plaintiffs say Heinle withdrew from negotiations with them.
Additionally, Plaintiffs contend that Defendants repudiated the 1998
agreement by these communications with Heinle and also by seeking to
negotiate with Lee a license to exploit the dictionaries in Asia.
Plaintiffs contend that the 1997 agreement in which CTC was
included in the definition of "Author," to whom Heinle was to pay
royalties for all sales of the Basic NHD entitles Plaintiffs to
half of all royalties from the Basic NHD. Plaintiffs further allege that
Defendants retained all such royalties and therefore breached the 1997
agreement. Counts one through five of the complaint relate to the 1997
agreement. The sixth cause of action alleges breach of the 1998 agreement
between Heinle and the parties relating to Plaintiffs' exploitation of
the dictionaries. The seventh cause of action claims that Defendants
tortiously interfered with Plaintiffs' negotiations with Asian publishers
regarding the dictionaries in Asia. Finally, the eighth cause of action
seeks injunctive relief: (1) barring Defendants from interference with
Plaintiffs' negotiations with publishing companies; (2) preventing
Defendants from exploiting the dictionaries in Asia; and (3) requiring
Defendants to turn over databases for the dictionaries to Plaintiffs.
Plaintiffs move for partial summary judgment on their first cause of
action, that is, that Defendants breached the 1997 agreement. Defendants
move for summary judgement as to all claims.
II. SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56(c) provides that summary judgment is
appropriate "if 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).
Summary judgment should only be granted "if after discovery, the
nonmoving party `has failed to make a sufficient showing on an essential
element of its case with respect to which it has the burden of proof.'"
Berger v. United States, 87 F.3d 60, 65 (2d Cir. 1996) (quoting Celotex
Corp. v. Catrett 477 U.S. 317, 323 (1986)). When viewing the evidence,
the Court must "assess the record in the light most favorable to the
nonmovant, resolve all ambiguities and draw all reasonable inferences in
its favor." Delaware & Hudson Ry. Co. v. Consolidated Rail Corp.,
902 F.2d 174, 177 (2d Cir. 1990).
An issue of fact is genuine when "a reasonable jury could return a
verdict for the nonmoving party," and such contested facts are material
to the outcome of the particular litigation if the substantive law at
issue so renders them. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). "If, as to the issue on which summary judgment is sought, there
is any evidence in the record from any source from which a reasonable
inference could be drawn in favor of the nonmoving party, summary
judgment is improper." Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 37
(2d Cir. 1994). Only when it is apparent that no rational trier of fact
"could find in favor of the nonmoving party because the evidence to
support its case is so slight" should a court grant summary judgment.
Gallo v. Prudential Residential Services. LP, 22 F.3d 1219, 1223-24 (2d
A. Plaintiffs' Motion for Partial Summary Judgment
Plaintiffs maintain that no genuine factual dispute exists as to
whether Defendants breached
the 1997 agreement. The 1997 agreement provides, "Publisher agrees to pay
the Author a royalty based on the net cash received by the publisher from
the sale of the work. . . ." (Plaintiffs' Notice of Motion, Exh. 1,
¶ 3.) The contract defines "Author" as MAP and CTC. (Id. ¶ 1.)
According to Plaintiffs, Heinle paid all non-Asian royalties to MAP, and
none to CTC. From this fact, Plaintiffs leap to the conclusion that the
contract clearly and unambiguously entitles MAP and CTC to one-half of
royalty payments for sales outside of Asia, and therefore Defendants
breached the agreement. The 1997 agreement, however, says nothing about
the amount of royalties that MAP and CTC were entitled to receive.
"In a contract dispute, a motion for summary judgment may be granted
only where the agreement's language is unambiguous and conveys a definite
meaning." Savers v. Rochester Tel. Corp. Supplemental Mgmt Pension Plan,
7 F.3d 1091, 1094 (2d Cir. 1993). Whether a contract is clear and
unambiguous is a matter of law for the court. Lucente v. Int'l Bus.
Machs. Co., 310 F.3d 243, 257 (2d Cir. 2002). As stated above, the
contract is not clear on whether Plaintiffs are entitled to non-Asian
royalties and if so, in what amount. Therefore, the contract's meaning is
a question of fact for the jury. Id. at 257; Savers, 7 F.3d at 1094.
Plaintiffs' motion for partial summary judgment is denied.
B. Defendants' Motion for Summary Judgment
Defendants contend that the court should grant them summary judgment
because the gravaman of Plaintiffs' claims is that Defendants tortiously
interfered with Plaintiffs' prospective business relations with
publishing companies, and such a claim cannot stand. Defendants tell the
Court that Plaintiffs' complaint is like a house of cards it
collapses once the tortious interference claim is removed. Plaintiffs
allege eight causes of action, however, of which the tortious
claim is but one. Resolution of Defendants' motion requires analysis of
each cause of action alleged.
1. Tortious Interference Claim
To establish a claim under New York law*fn1 for tortious interference
with prospective economic relations, Plaintiffs must demonstrate: (1)
they had business relations with a third party; (2) Defendants interfered
with those relations; (3) Defendants acted through wrongful means; and
(4) Defendants' interference harmed the business relations. Lombard v.
Booz-Allen & Hamilton, Inc., 280 F.3d 209, 214 (2d Cir. 2002).
Defendants argue that Plaintiffs cannot demonstrate use of wrongful means
or harm to prospective relations. Defendants are correct.
Plaintiffs contend that Defendants' acts preempted potential business
relations between CTC and Heinle and between CTC and Doosan Publishing, a
Korean publisher. The Court need not tarry on whether CTC had any
prospective business relations with these companies because Plaintiffs
show no evidence of wrongful means or actual harm suffered.
"`Wrongful means' include physical violence, fraud or
misrepresentation, civil suits and criminal prosecutions, and some
degrees of economic pressure; they do not, however, include persuasion
alone although it is knowingly directed at interference with the
contract." NBT Bancorp. Inc. v. Fleet/Norstar Fin. Group, Inc.,
664 N.E.2d 492, 496 (N.Y. 1996) (quoting Guard-Life Corp. v. Parker
Hardware Mfg. Corp., 406 N.E.2d 445, 449 (N.Y. 1980)). Whether economic
pressure constitutes unlawful means must be analyzed in light of the
[T]he circumstances in which it is exerted, the object
sought to be accomplished by the actor, the degree of
coercion involved, the extent of the harm that it
threatens, the effect upon the neutral parties drawn
into the situation, the effects upon competition, and
the general reasonableness and appropriateness of this
pressure as a means of accomplishing the actor's
Scutti Enters., LLC v. Park Place Entm't Corp., 322 F.3d 211, 216 (2d
Cir. 2003) (quoting Restatement (Second) of Torts § 767 cmt. c).
Plaintiffs argue that Defendants' wrongful means began on July 18,
2000, when Rideout sent a facsimile to both Heinle and Lee regarding
Heinle's rights to exploit the dictionaries in Asia. Plaintiffs have
submitted an affidavit from Lee, in which she alleges that Rideout
interfered with negotiations with Heinle by "insisting that Heinle
transfer to MAP Heinle's right to exploit" the dictionaries, (Affidavit
of Amy Lee in Opposition to Defendants' Motion for Summary Judgment ("Lee
Aff."), ¶ 28.)
There is nothing in the fax, in Lee's affidavit, or in any of the other
exhibits appended to Lee's affidavit, that raises a genuine issue as to
whether any wrongful means were used. Rideout openly sent this
communication to Lee during the process of business negotiations. The
communications were not made for the purpose of harming Plaintiffs but
related to contracts to which Defendants were parties. In addition, there
is little negative impact on competition generally because the parties
were not competitors but were engaged in a joint venture. Finally,
Rideout's actions never rose above mere persuasion, as there is no
evidence to suggest that Defendants could, or did, assert any economic
pressure on Heinle. Rideout's alleged offer to subsidize Heinle's legal
fees in a potential dispute with Plaintiffs does not constitute a threat
of a civil suit; any suit would have been against Plaintiffs and not
Heinle, and so not a form of economic pressure on Heinle. Thus, applying
the factors set forth in Scutti, the alleged conduct does not rise to the
level of wrongful means. 322 F.3d at 216. The failure to adequately
establish wrongful means is itself fatal to the tortious interference
claim. See Mega Tech Int'l Corp. v. Miller Elec. Mfr. Co., 1997 WL
790750, at *5 (S.D.N.Y. Dec. 23, 1997).
With regard to Doosan Publishers, Plaintiffs have offered no evidence
that their prospective business relations were actually harmed. In fact,
Plaintiffs actually succeeded in their negotiations with Doosan.
According to Lee, Doosan and CTC entered into a contract to publish a
dictionary on May 20, 1999. (Declaration of Steven M. Rabinowitz in
Support of Defendants' Motion for Summary Judgment, Exh. E at 366.)
Defendants' wrongful actions, even if adequately supported, produced no
cognizable harm. Defendants are granted summary judgment on Count Seven
of the complaint.
2. Breach of the 1998 Agreement
Plaintiffs allege that Defendants breached the 1998 agreement between
CTC and MAP through repudiation of that agreement, preventing Plaintiffs
from exercising their rights under the agreement, and depriving
Plaintiffs of the benefits of the 1998 agreement. To defeat summary
judgment on the breach of contract claim relating to the 1998 agreement,
Plaintiffs must go beyond their pleadings and demonstrate, by
affidavits, depositions, interrogatories, or admissions, that there are
material issues of fact in dispute. Davis v. New York, 316 F.3d 93, 100
(2d Cir. 2002).
Plaintiffs first allege that Defendants breached the 1998 agreement
when "Rideout stated that MAP intended to exploit derivations and
adaptations" of the dictionaries in Asia and "to keep all of the proceeds
of such exploitation for MAP." (Lee Aff. ¶ 29.) In addition, "Rideout
claimed that MAP held the copyright to the Dictionaries," and "made an
overture to [Lee on August 3, 2000] to attempt to negotiate a license for
Asia." (Id. ¶¶ 30, 32.) Finally, Plaintiffs assert that Defendants
breached the 1998 agreement by interfering with the ongoing negotiations
between Heinle and Plaintiffs regarding exploitation of the dictionaries
Defendants argue that no interference by Rideout could breach the 1998
that agreement was expressly subject to the contracts signed with
Heinle, which gave to Heinle broad world-wide publication rights. Thus,
Plaintiffs had to negotiate with Heinle to get a waiver or release of
Heinle's rights in Asia.
The question whether Defendants' actions in communicating with Heinle
during its negotiations with Plaintiffs breached the 1998 agreement, and
the content of that agreement, are questions for the jury. The 1998
agreement is not unambiguous regarding Defendants' duties in subsequent
dealings with Heinle, and a reasonable jury might find that Defendants'
communications with Heinle breached its contractual obligations to
Plaintiffs. Therefore, summary judgment is denied as to the claim that
Defendants breached the 1998 agreement.*fn2
3. Claim for Prospective Lost Profits
Defendants argue that Plaintiffs cannot recover damages as a matter of
law for lost profits even if they succeed on the breach of contract claim
relating to the 1998 agreement. Defendants base this argument on the
grounds that the lost profits are too speculative and that the expert
report offered by Plaintiffs must be rejected as unreliable.
Plaintiffs do not raise any arguments in response to Defendants' motion
for summary judgment on the issue of lost profits, except to state in a
footnote that it is premature for the Court to determine the
admissibility of their expert report. Defendants' burden is discharged by
"`showing" that is, pointing out to the district court
that there is an absence of evidence" to support Plaintiffs' claim for
lost profits. Celotex Corp., 477 U.S. at 325. This Defendants have done.
It is Plaintiffs' burden, then, to provide evidence supporting its claim
for lost profits. See
Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 525 (2d Cir. 1994).
Plaintiffs have failed to carry this burden as they have not cited to any
evidentiary support for their claim for lost profits. Thus, Defendants
are entitled to summary judgment on the issue of lost profits. Plaintiffs
are barred from seeking such damages at trial.
4. Breach of the 1997 Agreement, Unjust Enrichment, and Conversion
Defendants' motion for summary judgment with regard to its alleged
breach of the 1997 agreement is based on the same reasoning as
Plaintiffs' motion for partial summary judgment. As explained above, the
1997 agreement is ambiguous as to whether CTC's inclusion as an "Author"
under the contract entitles Plaintiffs to a share of the royalties. This
ambiguity must be resolved by the jury. Lucente, 310 F.3d at 257;
Savers, 7 F.3d at 1094. Defendants' motion for summary judgment regarding
breach of the 1997 agreement, and the related causes of action-unjust
enrichment and conversion is denied.
5. Injunction Compelling Delivery of Defendants' Databases
Finally, Defendants move for summary judgment on Plaintiffs' claim that
they are entitled to an injunction compelling delivery of computer
databases containing the dictionaries and all derivations thereon
currently in Defendants' possession. Plaintiffs contend that the 1998
agreement gives them a copyright in the dictionaries for the purpose of
exploiting the dictionaries and derivations thereon in Asia. Thus, to
exploit the copyright, Plaintiffs argue that they must have access to the
databases. Defendants argue that any such copyright does not
automatically translate into a right to access the databases. If it is
determined that the 1998 agreement grants this copyright, the Court can
issue an injunction requiring Plaintiffs to provide Defendants access to
the databases if the other necessary elements for injunctive relief are
established. See Carter v. Helmsly-Spear,
Inc., 861 F. Supp. 303, 331 n.15 (S.D.N.Y. 1994), rev'd on other
grounds, 71 F.3d 77 (2d Cir. 1995). Accordingly, the Court denies summary
judgment on Plaintiffs' claim for an injunction requiring access to the
For the foregoing reasons, Plaintiffs' motion for partial summary
judgment is DENIED and Defendants' motion for summary judgment is GRANTED
IN PART AND DENIED IN PART. Specifically, Defendants' motion is granted
as to Plaintiffs' claims for tortious interference, damages in the form
of lost profits, and an injunction barring Plaintiffs from interfering in
Defendants' contractual negotiations with Heinle and other publishers.
All other claims shall proceed to trial.