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Caruso v. Grace


September 27, 2011


The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.



Patricia Caruso, a veteran of the entertainment industry, brings this diversity action against Nancy Grace, a legal analyst and television series host, alleging breach of contract. Caruso's allegations arise out of an oral contract between Caruso and Grace that Grace would refrain from proceeding with a television series unless Caruso were offered the role of executive producer, and Grace's subsequent alleged breach of that agreement in proceeding with the show.

Before the Court are (1) Grace's motion to dismiss asserting that the alleged contract is defective as a matter of law because (a) it violates the statute of frauds since it could not be performed within one year; (b) it violates the statute of frauds because it involved a contract to pay for the negotiation of a business opportunity; (c) it is indefinite with respect to its material terms; and (2) Grace's motion for sanctions on the grounds that this action is frivolous. For the reasons discussed below, Grace's motions are denied.


A. The Parties and Their History

Patricia Caruso has worked in the entertainment industry for three decades and is the founder of Ashwells Entertainment, a production and public relations firm.*fn2 Nancy Grace is a former attorney and the host of two television shows, a nightly legal analysis series on Headline News, a division of CNN,and Swift Justice with Nancy Grace ("Swift Justice"), a syndicated television series.*fn3

Caruso and Grace first met while both worked for the cable television channel Court TV.*fn4 Since that time Caruso and Grace have been personally and professionally friendly.*fn5

While Grace was working for CNN her contract came up for renewal in 2006-07.*fn6 During the negotiations, Caruso advised Grace to insist on a "carve-out" provision that would permit her to appear on a syndicated television series.*fn7

Caruso explained the financial possibilities that such an opportunity would provide, and Grace ultimately asked for and received a "carve-out" provision in her CNN contract.*fn8 After that time Caruso and Grace frequently discussed the possibility of collaborating on a syndicated television series, and Grace explored some possibilities on her own.*fn9 Neither these talks nor Grace's explorations led to anything.*fn10

B. The Contract

In early 2008, Caruso and Grace had a lunch meeting in Manhattan to discuss collaborating on a law-themed syndicated television series featuring Grace.*fn11 At the meeting Caruso described her idea for a possible series entitled Grace's Cases.*fn12 The show would be a law-themed syndicated television series in which Grace would help individuals pursue and resolve their legal issues.*fn13 Caruso and Grace then discussed potential alternative formats and the current market for such a series.*fn14

Following these discussions, Caruso and Grace reached an agreement (the "Agreement") containing the following specific provisions regarding their intention to work together on a law-themed syndicated television series:

Caruso agreed:

a) To develop and/or assist in the development of a concept for a law-themed syndicated series featuring Grace (the "Series").

b) To market the Series to appropriate buyers or financiers, including broadcast television networks.

c) To serve as an executive producer to the Series. . . . Grace specifically agreed:

a) To cooperate in the development, production, and marketing of the Series, including attaching her name to the Series and attending meetings to market and sell the Series.

b) To proceed with the Series only in the event that Caruso were retained and credited as an executive producer.

c) To host the Series.*fn15

The positions of "executive producer" is uniformly recognized in the television industry, and both parties understood this at the time of their Agreement.*fn16 The position involves a variety of duties including involvement in developing the format and look of the series, marketing and publicity for the series, selecting a "show runner," selecting and overseeing a production team, supervising selection of supplemental cast and overseeing production of individual segment concepts, including booking guests.*fn17

The Agreement did not just pertain to the treatment for Grace's Cases.*fn18 Though Caruso and Grace intended to propose Grace's Cases to network executives, they understood that "another format could prove more attractive."*fn19

Therefore, they agreed that the Agreement "covered the Series in whatever format gained traction in the market."*fn20 In other words, the Agreement was intentionally made broad enough to cover any other format that the idea for their series might take if and when it became a syndicated series.*fn21

C. Early Efforts to Create and Sell the Series

After making the Agreement, Caruso began working on the treatment for Grace's Cases by (1) reviewing and discussing numerous versions of the treatment with Grace; (2) contacting Eric Schotz, the President and CEO of LMNO Productions, to assess industry interest; (3) meeting with Schotz and Grace to discuss trying to sell the show; (4) contacting William Morris Agency and Endeavor Talent Agency to enroll a talent agency to represent Caruso and Grace; and (5) enlisting the assistance of Shannon Murphy, CEO of Encounter Studios, to pitch Grace's Cases to CBS in Los Angeles.*fn22 Between the making of the Agreement and October 2008, Caruso and Grace exchanged dozens of communications, including in-person meetings, about evolving concepts for their Series idea.*fn23

D. The CBS Pitch

In December 2008, Caruso instructed Murphy to meet with Abra Potkin, CBS's Vice President of Programming and Development, and present a treatment for Grace's Cases.*fn24 Murphy conducted the meeting and then informed Caruso that CBS had responded enthusiastically about the treatment and wanted to pursue the series.*fn25 In follow-up conversations between Caruso, Grace and Murphy, Grace requested that Dean Sicoli be added to the team.*fn26 Grace then asked her attorney, Lawrence Shire, to contact Caruso to discuss the status of a CBS contract.*fn27 Caruso informed Shire that CBS wanted to meet Grace before making a formal offer.*fn28 Caruso also informed Grace that CBS might have its "own idea" for the syndicated series.*fn29

A personal meeting between Grace and CBS representatives, Potkin and Terry Wood, President of Creative Affairs and Development, was held on January 13, 2009.*fn30 Before the meeting, Murphy informed CBS that Caruso would attend as the Series' executive producer.*fn31 Caruso, Grace, and Sicoli attended this meeting, as did Jim Kellem, representing Shannon Murphy.*fn32 At the meeting CBS's Wood informed the group that they were not interested in the Grace's Cases format for the series, but they were interested in a similar series featuring half-hour segments in the courtroom genre, with Grace resolving cases as a judge.*fn33

The parties present discussed the range of cases that might be presented in that format, and Grace informed CBS that Caruso would take the lead on communicating with the network for the next development meeting.*fn34 These discussions led to the emergence of Swift Justice.*fn35 Following the January 13 meeting and over the next year, Grace "repeatedly and consistently affirmed" the Agreement, "with the promise of Caruso becoming executive producer of the Series regardless of the Series format."*fn36

On January 27, 2009, Caruso and Grace agreed that Sean Perry of Endeavor Talent Agency would represent them in negotiations with CBS.*fn37 In a telephone call that day, Grace told Caruso that she would never do any syndicated series without her.*fn38 Perry contacted CBS's Wood to confirm that he would represent "Nancy, Dean and Patty."*fn39 Grace sent an e-mail to Caruso, Perry and Potkin expressing her hope that they could come up with a great show and that all further CBS communications should come though Caruso.*fn40 On January 29, 2009, in response to rumors that CBS wanted Caruso out of any deal with Grace, Grace stated through her attorney "it's the opposite - I will not do any deal without Patty."*fn41 Between January 29 and March 17, Grace continually assured Caruso that she would handle CBS on behalf of Caruso and that Grace would insist on "[Caruso] and Dean [Sicoli] as EPs on the show."*fn42 Between April and May 2009, Caruso also instructed Perry to pitch the Series to other networks such as NBC and Fox in case CBS did not make a formal offer.*fn43 Grace, Caruso and Sicoli participated in all these pitches as a team.*fn44

E. The CBS Offer

In May 2009, CBS made Grace an offer to shoot a pilot for the Series.*fn45 Grace reported this development to Caruso, and Grace and Caruso discussed the content of the Series up to and through the shooting of the pilot.*fn46

During that time-period, Grace told Caruso repeatedly that she would not sign a contract without Caruso in place as executive producer.*fn47 On September 14, 2009, Grace instructed her attorney, "Before I sign deal [sic] I hav[e] to have . . . patty in place . . . We said [we'd] wait til the end and here it is."*fn48 Likewise on September 25, 2009, Caruso's attorney stated to Grace's attorney that Caruso expected to be credited and compensated as an executive producer in accordance with the Agreement.*fn49 In response Grace's attorney confirmed to Caruso's attorney that Grace's and Caruso's expectations would be met, and stated that Grace had "gone to bat for Patty [in negotiations with CBS] in a huge way."*fn50

On September 29, 2009, Grace's attorney informed Caruso's attorney that Grace had no contractual relationship with Caruso and was only acting "out of friendship."*fn51 Alarmed, Caruso contacted Grace who contradicted her attorney and told Caruso that she did not want Caruso out of the deal, but that it was too early to press CBS on the executive producer role.*fn52 In October 2009, both Grace and Caruso flew out to California for several days of meetings as well as the taping of the pilot.*fn53 Grace paid for Caruso to fly out, and Caruso took an active role in the pilot shooting where Grace reaffirmed the Agreement.*fn54

On December 2, 2009, the news broke that CBS had sold Swift Justice to eighty percent of the U.S. syndicated television market.*fn55 After the announcement, Grace, Caruso and their husbands went out for a celebratory dinner where they discussed their plans for the show.*fn56 Grace then sent Caruso communications indicating that Grace would honor the Agreement, and Grace did not disagree when Caruso articulated her expectation that she and Sicoli would be credited and compensated as "co-executive producers."*fn57 During the following weeks, Grace and Caruso continued to communicate, and Grace reassured Caruso explicitly that she would not be cut from the team and that she would be executive producer.*fn58 On January 14, 2010, Grace e-mailed Caruso stating, "It is going to work!!!"*fn59

F. Grace's Breach of the Agreement

On February 8, 2010, Caruso was told for the first time by Potkin that CBS was not interested in retaining Caruso as executive producer of Swift Justice.*fn60 Potkin further informed Caruso that Grace had not insisted on Caruso's role as executive producer in negotiations with CBS.*fn61 On March 5, 2010, CBS offered Caruso a position on Swift Justice entitled "Executive, Talent and Audience Relations," a year-long position with compensation of $100,000 and the possibility of a renewal.*fn62 This position involved different duties than the position of executive producer.*fn63

In the Spring of 2010 Grace agreed to host Swift Justice even though CBS refused to make Caruso an offer to join as executive producer.*fn64 The show launched in the Fall of 2010 and debuted as the highest rated new syndicated television series of the Fall 2010 season.*fn65 Because Caruso was not brought on the show as executive producer she lost out on the compensation that she would have received in that position.*fn66 The customary compensation for executive producers in the entertainment industry includes ten percent of the show budget per week and ten percent of the modified adjusted gross revenue for the life of the television series.*fn67 Caruso projects that for Swift Justice these figures may reasonably add up to fifteen million dollars.*fn68 Caruso also complains that by breaching the Agreement, Grace caused Caruso to lose out on "industry-recognized credit" as executive producer of a highly successful syndicated television series.*fn69

Caruso commenced this action on March 8, 2011, in New York State Supreme Court in New York County alleging one count of breach of contract and seeking damages of at least fifteen million dollars as well as punitive damages, attorney's fees and interest.*fn70 Grace filed a Notice of Removal on April 6, 2011, to remove this action to the United States District Court in the Southern District of New York.*fn71 Grace's Notice of Removal was based on diversity of citizenship as Caruso is a citizen of New York, Grace is a citizen of Georgia and the amount in controversy exceeds $75,000.*fn72 Grace now moves to dismiss the Complaint on the grounds of failure to state a claim upon which relief can be granted. In addition, Grace has filed a motion for sanctions claiming that the present action is frivolous.


A. Motion to Dismiss

In deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the court evaluates the sufficiency of the complaint under the "two-pronged approach" suggested by the Supreme Court in Ashcroft v. Iqbal.*fn73

First, a court "'can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.'"*fn74

"Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to withstand a motion to dismiss.*fn75 Second, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief."*fn76 To survive a Rule 12(b)(6) motion to dismiss, the allegations in the complaint must meet a standard of "plausibility."*fn77 A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."*fn78

Plausibility "is not akin to a probability requirement;" rather, plausibility requires "more than a sheer possibility that a defendant has acted unlawfully."*fn79

"In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint."*fn80 However, the court may also consider a document that is not incorporated by reference, "where the complaint 'relies heavily upon its terms and effect,' thereby rendering the document 'integral' to the complaint."*fn81

B. Motion For Sanctions

An attorney may only assert "claims, defenses, and other legal contentions [that] are warranted by existing law or by a non-frivolous argument for extending, modifying, or reversing existing law or for establishing new law."*fn82 A court may impose sanctions for violations of Rule 11 if such sanctions are "limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated."*fn83 "[D]istrict courts retain broad discretion in fashioning sanctions."*fn84 "The fact that a legal theory is a long-shot does not necessarily mean it is sanctionable. The operative question is whether the argument is frivolous, i.e., the legal position has 'no chance of success,' and there is 'no reasonable argument to extend, modify or reverse the law as it stands.'" *fn85


A. Breach of Contract

To make out a breach of contract claim under New York law a plaintiff must show "'(1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages.'"*fn87 A plaintiff alleging a breach of contract claim is required only to provide a defendant with a "short, plain notice" of the claims against it pursuant to Rule 8.*fn88 However, a breach of contract claim "that fails to allege facts sufficient to show that an enforceable contract existed between the parties is subject to dismissal."*fn89

Under New York law, "before the power of law can be invoked to enforce a promise, it must be sufficiently certain and specific so that what was promised can be ascertained."*fn90

The doctrine of definiteness or certainty is well established in contract law. In short, it means that a court cannot enforce a contract unless it is able to determine what in fact the parties have agreed to . . . . [I]f an agreement is not reasonably certain in its material terms, there can be no legally enforceable contract.*fn91

However, "[b]efore rejecting an agreement as indefinite, a court must be satisfied that the agreement cannot be rendered reasonably certain by reference to an extrinsic standard that makes its meaning clear."*fn92

B. Statute of Frauds

"Consideration of the Statute of Frauds as an affirmative defense is appropriate on a motion to dismiss, as such a motion is intended to weed out meritless claims, avoiding needless efforts on the parts of the parties and the Court and avoiding needless discovery."*fn93 The statute of frauds "was intended to prevent fraud in the proving of certain legal transactions particularly susceptible to deception, mistake and perjury."*fn94 Regarding "the requirement for a signed writing for a contract not to be performed within one year, the design of the statute was, not to trust to the memory of witnesses for a longer time than one year."*fn95

Under New York law "[e]very agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking . . . [b]y its terms is not to be performed within one year from the making thereof."*fn96

[I]t is not the meaning of the statute that the contract must be performed within a year. If it can be so performed consistently with the language in which the parties have expressed themselves, in other words, if the obligation of the contract is not, by its very terms, or necessary construction, to endure for a longer period than one year, it is a valid agreement, although it may be capable of an indefinite continuance. . . . Wherever an agreement has been found to be susceptible of fulfillment within that time, in whatever manner and however impractical, this court has held the one-year provision of the Statute to be inapplicable, a writing unnecessary, and the agreement not barred.*fn97

"The law is well-settled that for a contract to fall within this provision of the Statute of Frauds, there must be absolutely no possibility of performance of the contract within one year."*fn98

The New York State statute of frauds further provides that "a contract to pay compensation for services rendered in negotiating a loan, or in negotiating the purchase, sale, exchange, renting or leasing of any real estate or interest therein, or of a business opportunity [is void unless it] be in writing."*fn99 "'[W]here . . . the intermediary's activity is . . . that of providing "know-how" or "know-who", in bringing about between principals an enterprise of some complexity or an acquisition of a significant interest in an enterprise,' the statute of frauds applies."*fn100 However, the statute of frauds is inapplicable "where the duties of the party seeking enforcement go beyond mere negotiating or where the party seeking enforcement is a principal."*fn101 Thus where the relationship between the parties is more "closely akin to that of [a] joint venture" no writing is required.*fn102


A. The Agreement Could Have Been Performed Within One Year

It is undisputed that this controversy involves only an oral contract. Grace argues that this contract is unenforceable under the New York statute of frauds because it is essentially a "restrictive covenant[] not capable of being performed within one year."*fn103 While indefinite restrictive covenants are indeed subject to the statute of frauds, this only applies where the agreement cannot possibly be completed within a year.*fn104 Restrictive covenants are generally barred under the statute of frauds where they are - by their own terms - indefinite, such as agreements that entitle a party to a fee or commission for as long as it sells or markets an item.*fn105 In such cases, the statute of frauds applies because, although there is always a possibility that the agreement will cease to be relevant after a year - for instance if the parties die or no longer wish to market the item in question - these remote contingencies are considered more akin to a termination of the contract, rather than a performance. However, where the contract itself "'include[s] an event which might end the contractual relationship of the parties within a year, defendant's possible liability beyond that time would not bring the contract within the statute.'"*fn106

The Agreement in this case contemplated that Grace would "proceed with the Series only in the event that Caruso were retained and credited as an executive producer."*fn107 Construing the pleadings in the light most favorable to Caruso, as this Court must, this Agreement could have been completed - not merely terminated - within one year, however unlikely such a prospect was. While Grace contends that the Agreement obligated Grace "not to host a syndicated television series unless Caruso is an executive producer . . . for the remainder of her life,"*fn108 this is not the only reading, or perhaps even the fairest reading, of Caruso's Complaint. It is plausible to read the Complaint as referring to a single restriction on Grace preventing her from going ahead with a particular television series - one that might arise out of Grace's and Caruso's talks about a law-themed syndicated series - until and unless Caruso was extended a good faith offer to be executive producer. This restriction was not, by necessity, of infinite duration. Had CBS offered an executive producer position to Caruso and had Grace proceeded with the show within a year of the Agreement, the contract would have been complete and all mutual obligations discharged.*fn109 This constituted a plausible contingency, a one-time event contemplated by the parties, under which the Agreement would be completed within a year.*fn110 Thus, despite the fact that the Agreement's restrictions could have endured indefinitely, this is not the only plausible reading of the Agreement, and indeed the more likely reading of Caruso's Complaint "states a plausible claim for relief."*fn111

B. The Agreement Was Not a Contract to Pay for the Negotiation of a Business Opportunity

Grace further argues that the Agreement is barred under the statute of frauds because by agreeing to promote and develop the Series, Caruso was involved in the negotiation of a business opportunity. While Grace is correct that Caruso's actual duties in setting up the Series fall into the broad definition that courts have given to negotiating a business opportunity,*fn112 the Agreement is not barred because Caruso did not enter into an agreement for compensation for her services.*fn113

The statute of frauds' bar against oral contracts concerning the negotiation of business opportunities applies where plaintiffs demand compensation for past work in such roles.*fn114 The Agreement in this case, however, did not contemplate any form of compensation from Grace to Caruso; rather, they agreed that Grace would host the series "only in the event that Caruso were retained and credited as an executive producer."*fn115 The contract, thus construed, falls outside the scope of the statute of frauds. Grace contends that the Agreement should nevertheless be barred inasmuch as it represents an end-run around the statute.*fn116 While I appreciate the creativity of Grace's argument, statutory construction is not that flexible.*fn117 Furthermore, resolving all ambiguities in favor of Caruso, it is plausible that the Agreement was akin to a joint venture, and not an agreement providing for the compensation of Caruso for her efforts.*fn118 In any event, whether this is a contract for the negotiation of a business opportunity - wherein Caruso would be compensated for her past efforts - or a joint venture is a question of fact that must be explored during the discovery process. Accordingly, Grace has failed to show that Caruso's Complaint must be dismissed as a matter of law under the statute of frauds.

C. The Agreement Was Not Indefinite With Respect to Material Terms Grace asserts that the Agreement is unenforceable as a matter of law

because it contained material terms that were never defined. Specifically, Grace contends that the following terms were not defined: (1) "executive producer;" (2) compensation for Caruso; and (3) the duration of the Agreement. In short, Grace claims that the Agreement was merely an agreement to agree.*fn119 The parties do not dispute that material terms must be defined for a contract to be valid and that titles, compensation and duration of an agreement constitute material terms of a contract. What the parties dispute in this action, is the application of these principles to the Agreement.

Regarding the position of "executive producer," Caruso maintains that this role is "uniformly recognized in the television industry."*fn120 Caruso also lists the specific duties and responsibilities of an executive producer.*fn121 Caruso's pleadings thus provide more than threadbare legal conclusions that the term "executive producer" has a uniform meaning within the industry, and that Grace and Caruso reached a mutual understanding regarding this term at their initial conference. At this early stage in the proceeding, I cannot say as a matter of law that the position of executive producer was not defined.

With respect to compensation, Caruso claims that no agreement was necessary because the Agreement did not obligate Grace to provide any compensation. In fact, the Agreement only provides that Grace would not proceed with the Series unless Caruso were made executive producer.*fn122 Grace seeks to overcome this obstacle by claiming that without any clarification of what the parties intended as compensation, they could never agree on what would constitute an offer to retain and credit Caruso as executive producer.*fn123 However, given that Caruso has alleged industry-wide duties as well as compensation for executive producers,*fn124 it is plausible that the Agreement was not vague.*fn125 Furthermore, it is reasonable to infer from the Complaint that Caruso was interested in the position of executive producer not just for the compensation involved, but also for the credit and recognition that comes with holding such a position.*fn126 Thus, drawing every inference in Caruso's favor as I must, the terms of the Agreement are sufficiently stated such that the claim may proceed.

The failure to state the duration of an agreement is also a material term in a contract whose absence can render an agreement unenforceable.*fn127

Nonetheless, courts should not strictly apply the doctrine of indefiniteness, and its use should be "at best a last resort."*fn128 This Agreement does not involve a specific act or performance that would require a precise duration or timeline. Instead, the Complaint suggests that Grace and Caruso began to work "[i]mmediately after the Jubilee meeting, and continuously thereafter" in order to bring their idea to fruition.*fn129 While the Complaint fails to allege any deadlines or timelines, it plausibly suggests that Grace and Caruso agreed to, and did, begin work on developing their proposal for a syndicated television series and bring it to a network at the earliest possible time. Based on the Agreement and the attendant circumstances, it is plausible "that the parties intended to be bound" by the terms upon which they did agree.*fn130

Finally, Grace insists that the Agreement in question is so lacking in definiteness that it constitutes nothing more than "a mere agreement to agree."*fn131

Taking the Agreement as stated by Caruso, however, its content is clear. In an agreement to agree, the parties, rather than agreeing on the terms of their bargain, simply agree "to negotiate the open issues in good faith in an attempt to reach the . . . objective within the agreed framework."*fn132 The essence of an agreement to agree is the intent of the parties to finalize the substance - or substantive portions - of their agreement in the future.*fn133 The Agreement here, however, includes the type of television show that Grace and Caruso were to work on ("a law-themed syndicated series"), the specific positions the parties would hold ("executive producer" and "host"), and particular steps to be taken ("market[ing]" and "development").*fn134 Given such specificity in their design as well as the developing nature of the series they were working on, Caruso's alleged version of the Agreement includes a more focused and specific bargain than a mere agreement to agree. Because the Agreement is not so vague and indefinite as to render it unenforceable, Grace's motion to dismiss is denied.

D. Caruso's Arguments Do Not Merit Sanctions

As the previous discussion makes clear, Caruso's Complaint, with all plausible inferences drawn in her favor, states a claim as a matter of law. Caruso's claims, therefore, are not frivolous, and this Court declines to impose sanctions.


For the foregoing reasons, defendant's motion to dismiss and motion for sanctions are denied. The Clerk is directed to close these motions [Docket Nos. 6 and 10]. A conference is hereby scheduled for October 20, 2011 at 3:30 p.m. The parties are instructed to bring a proposed scheduling order to the conference in accordance with the Court's individual rules.


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