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AMC Film Holdings LLC v. Rosenberg

September 29, 2006

AMC FILM HOLDINGS LLC, PLAINTIFF,
v.
MAX J. ROSENBERG, REARGUARD PRODUCTIONS, INC., AND TV MATTERS, DEFENDANTS.



The opinion of the court was delivered by: Hurley, District Judge

MEMORANDUM OF DECISION AND ORDER

Defendant TV Matters has filed objections to the July 21, 2006 Report and Recommendation of Magistrate Judge Arlene Rosario Lindsay. Based upon the new arguments advanced in the objections, and the Court's de novo review, the Court awards TV Matters damages and attorneys' fees in the sum of $150,320.58, plus prejudgment interest.

BACKGROUND

I. TV Matters's Claims

On August 5, 2003, Plaintiff AMC Film Holdings LLC ("Plaintiff") initiated the instant copyright infringement action against defendants Rearguard Productions, Inc. ("Rearguard"), Max J. Rosenberg ("Rosenberg"), and TV Matters. Plaintiff alleged, inter alia, that it owned the copyrights to three motion pictures produced by Rosenberg and that it acquired its rights through a series of assignments.*fn1 Plaintiff further alleged that despite the fact that Rearguard had already assigned its rights to the motion pictures to Plaintiff's predecessor in interest years earlier, which ultimately led to Plaintiff's ownership, Rearguard later entered into a licensing agreement with TV Matters whereby Rearguard purported to authorize TV Matters to copy and distribute copies of the motion pictures.

On October 2, 2003, TV Matters answered the Complaint and filed cross-claims against Rearguard and Rosenberg. The cross-claims were later amended on March 16, 2004. TV Matters asserts four causes of action, viz. indemnity, breach of contract, fraud, and negligence. Neither Rosenberg nor Rearguard responded to either Plaintiff's Complaint or the cross-claims filed by TV Matters. Thereafter, TV Matters moved for a default judgment on its cross-claims. By Order dated October 19, 2005, TV Matters's motion was granted and the matter referred to Magistrate Judge Lindsay for a report and recommendation as to damages and attorneys' fees.

II. The March 1, 2006 Report and Recommendation

On March 1, 2006, Judge Lindsay issued a Report and Recommendation that Plaintiff be awarded $0.00 in attorneys' fees and costs and $0.00 in damages. In recommending that TV Matters's application for damages and fees be denied, Judge Lindsay found that "the materials submitted by TV Matters in support of its damages claims are plagued by technical deficiencies." (Mar. 1, 2006 Report at 3.) "For example, some of the exhibits are in another language or refer to transactions involving foreign currency without reference to a relevant conversion table, and other documents are partially illegible due to xeroxing errors which excised text." (Id. (citations to record omitted).)

Moreover, Judge Lindsay found that although TV Matters was asserting that it had incurred damages for breach of contract, and although the relevant contract had a choice of law provision providing that the law of the Netherlands governed, TV Matters argued in its submissions that New York law applied. In this regard, Judge Lindsay noted that "TV Matters has failed to explain to the Court why it contends that New York law rather than the law of the Netherlands should govern its claims for damages." (Id. at 4.) Because TV Matters "ignore[d]" the choice-of-law provision and "refer[red] solely to general New York damages law" in its submission, Judge Lindsay recommended that TV Matters's claim for damages resulting from Rearguard's breach of contract be denied. (Id. at 5.) Thereafter, TV Matters timely filed objections to the March 1, 2006 Report.

III. This Court's April 28, 2006 Decision

In its objections, TV Matters advanced separate arguments with regard to its contract and fraud claims. As to the former, TV Matters argued that New York law applied to its breach of contract claim based upon a provision in its contract with Rearguard which indicated that TV Matters could "submit [its] dispute" in a New York court. Finding that this provision was a forum selection clause, and not a choice-of-law provision, the Court rejected TV Matters's argument that its breach of contract claims were governed by New York law. This result was particularly apropos given that the contractual provision TV Matters relied on also contained a choice-of-law clause, which clearly provided that the law of the Netherlands applied.

With regard to TV Matters's fraud claim, TV Matters raised an argument that had not been presented to Judge Lindsay in the first instance: that the choice-of-law provision relied on by Judge Lindsay did not apply to its cross-claim for fraud. Reviewing TV Matters's new arguments de novo, the Court agreed. (See Apr. 28, 2006 Memorandum of Decision and Order at 4 (citing Finance One Pub. Ltd. v. Lehman Bros. Special Fin., Inc., 414 F.3d 325, 335 (2d Cir. 2005) ("Under New York law, . . . tort claims are outside the scope of contractual choice-of-law provisions that specify what law governs construction of the terms of the contract, even when the contract also includes a broader forum-selection clause.").) The Court went on to state, however, that TV Matters was incorrect in assuming that because this choice-of-law provision was inapplicable, New York law would automatically apply to its fraud claim:

TV Matters cites Curley v. AMR Corp., 153 F.3d 5 (2d Cir. 1998) for the proposition that because the parties to the instant dispute are diverse, the Court must apply the law of New York in its damages analysis. As noted by Judge Lindsay, however, Curley does not support that conclusion. ([Mar.1, 2006] Report at 4 n.2.) Rather, the court in Curley merely stated the well known principle that in diversity cases, the Court must look to the choice-of-law rules of the forum state. 153 F.3d at 12. Indeed, even in Finance One, the case cited by TV Matters, once the Second Circuit determined that the defendant's set-off claim was not within the scope of the parties' choice-of-law clause, the court proceeded to perform a choice-of-law analysis under New York law, to determine which law governed the set-off claim. Under such an analysis, the first question is whether there is an actual conflict of law. Id. at 12. In tort actions, if a conflict exists, "New York courts apply an 'interests analysis,' under which the law of the jurisdiction having the greatest interest in the litigation is applied." Id.

Here, Rosenberg and Rearguard are alleged to be California residents with Rearguard's principal place of business in California; TV Matters is a Netherlands corporation with its principal place of business in the Netherlands. Because TV Matters has not properly briefed the choice-of-law issue -- in fact it has not addressed the required analysis at all -- the Court declines to award damages at this time as it is unclear which law would govern TV Matters's fraud claim. Nonetheless, the Court will afford TV Matters one more opportunity to submit proper papers in support of its damages claims. TV Matters is warned, however, that failure to adequately address the legal issues presented by such claims and/or failure to submit materials ...


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