The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.
Command Cinema ("Command") brings this action against VCA Labs ("VCA"), doing business as Trac Tech Labs,*fn1 for breach of express contract, conversion, and breach of implied contract regarding the loss of two of Command's adult films. VCA now moves to dismiss Command's claim for conversion of both films, breach of implied contract covering both films, and breach of express contract for one of Command's adult films - The Firestorm Trilogy ("FT"). Command has cross-moved for summary judgment on its conversion claims for both films. VCA also moves in limine to exclude evidence of Command's lost profits as a measure of damages and to preclude Command's claim for punitive damages.
The following facts, drawn from the Amended Complaint, are assumed to be true for the purposes of this motion. Command is a New York corporation involved in the production of adult films, including four films entitled "The Last X-Rated Movie" 1, 2, 3 and 4, and three films entitled "Firestorm" 1, 2 and 3.*fn2 VCA is a California-based corporation that does business nationally, involving reproduction and distribution of entertainment media.*fn3
A. The Last X-Rated Movie Contract
On or about July 7, 1992, Command and VCA entered into an agreement providing that VCA was to combine the four Last X-Rated Movies ("LXRM") with out-takes from the films to create a special edition of the film.*fn4 Specifically, the parties agreed that VCA would use Command's four original 3/4 inch master tapes of the individual films to create two one inch "sub masters."*fn5
The contract required VCA to return the 3/4 inch tapes "immediately after the one inch sub masters [were] made."*fn6 The contract further provides that "[n]o other masters are to be duplicated. . . . [T]his version cannot be sold, shown or loaned to another party. The sub one inch masters are the property of Command Cinema Corp., and are to be returned to Command upon request, along with any and all of Command's other material."*fn7
B. The Firestorm Contract
On or about May 31, 1995, Command and VCA entered into an agreement similar to the LXRM contract to produce a special edition of Command's Firestorm ("FT") series, which was to be composed of all three Firestorm movies and out-takes.*fn8 The contract required VCA to return Command's original 3/4 inch masters after VCA created the one inch sub master.*fn9
The contract further provided that
[Command] is delivering 4 3/4" video masters of the films to Trac Tech for the sole and only purpose of duping 1/2" video tapes as ordered by Command. It is understood that no copies of these films, other than those ordered by Command, are to be made, and that the masters will be held in safe keeping by Trac Tech until this Agreement is terminated by either party.*fn10
The FT Contract further provides that "[s]hould the duplication master at any time become defective, Command, upon notification, will supply the appropriate 3/4" work master(s) again to Trac Tech."*fn11
C. Performance of Command and VCA
Between 1995 and 2005, Command repeatedly contacted VCA regarding the masters of its tapes and was each time assured that they were safe.*fn12 In reliance on VCA's assurances, Command disposed of its 3/4 inch original copies of LXRM and FT around December 2004, when it downsized into a new office.*fn13 On or about February 2005, VCA discontinued its duplication services and contacted its customers - except for Command - and asked its customers what they wanted VCA to do with their masters.*fn14 Through a bookkeeping error, which mistakenly labeled Command's videos as the property of Adam and Eve Productions ("A&E"), Command's masters were sent to RP Duplicating ("RP").*fn15
On or about February 17, 2005, Command learned of the misdelivery of its sub masters to RP and requested their return from VCA.*fn16 VCA made no attempt to retrieve the sub masters from RP, and Command attempted to obtain them directly from RP.*fn17 Command was eventually able to retrieve all of its masters except for LXRM and FT, which were either lost or stolen at RP or in transit.*fn18
Summary judgment is only appropriate where the record "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.*fn19 An issue of fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party,"*fn20 while a fact will be ...