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Candela Entertainment, Inc. v. Davis & Gilbert, LLP

Supreme Court, New York County

May 16, 2013

Candela Entertainment, Inc. and Cynthia Newport, Plaintiffs,
Davis & Gilbert, LLP, Defendant.

Unpublished Opinion

Vincent J. Syracuse and Matthew R. Maron of Tannenbaum Helpern Syracuse & Hirschtritt LLP (for the defendant)

Daniel S. Brecher of Scarinci & Hollenbeck, LLC (for the plaintiffs).

Hon. Eileen Bransten, J.S.C.

This matter comes before the Court on Defendant Davis & Gilbert, LLP's motion to dismiss Plaintiffs Candela Entertainment, Inc.'s ("Candela") and Cynthia Newport's (together with Candela, "Plaintiffs") Complaint pursuant to CPLR 3211(a)(1), (a)(7) and CPLR 3016(a). Plaintiffs oppose. For the reasons set forth below, Defendant's motion is granted, and the Complaint is dismissed in its entirety.

Background [1]

According to the Complaint, Plaintiff Candela Entertainment, Inc. retained Defendant Davis & Gilbert, LLP ("D & G") in October 2007 to assist in financing and transferring ownership of a movie entitled "Dance Cuba." (Cmpl. ¶¶ 1, 3.) Since 1999; Plaintiff Cynthia Newport has invested nearly $4, 500, 000 in "Dance Cuba" through her non-profit organization, Illume Productions, Inc. ("Illume"). (Cmpl. ¶¶ 1, 7.) In 2005, Newport formed Candela together with Curb Gardner, with both serving as co-presidents. (Affidavit of Mary M. Luria ("Luria Aff."), Ex. 1 at 1-2.) Candela retained D & G in order to, specifically, transfer ownership of "Dance Cuba" from Illume to Candela, as well as to assist in "completion of the film with new investors." (Affidavit of Cynthia Newport ("Newport Aff.") ¶ 2.) Mary M. Luria is the partner at D & G who was responsible for the representation. (Cmpl. ¶ 17.) The retainer agreement had as its signature line, "Agreed to and Accepted Candela Entertainment, Inc., " and all invoices from D & G were sent to Candela, "attn: [Co-President] Curb Gardner II." (Affirmation of Vincent J. Syracuse ("Syracuse Affirm."), Ex. 4 at 3; Newport Aff. Ex. F at 1.)

There are two transactions relevant to this motion, both occurring in October 2007. In the first transaction, Illume assigned all rights and agreements related to "Dance Cuba" to Candela in exchange for Candela assuming a portion of Illume's outstanding debts. (Newport Aff. Ex. I at 3, 5, 9-11.) The second transaction was a secured loan by Factory Pond, LLC ("Factory Pond") to Candela, with the use of "Dance Cuba" as loan collateral and with Newport and Gardner providing personal guarantees of the debt. (Newport Aff. Ex. E.)

On behalf of D & G, Luria revised and drafted several documents for both transactions, including a bill of sale, a trademark assignment, a Candela/Factory Pond deal memorandum and an "Assignment and Assumption Agreement" between Illume and Candela. [2] (Newport Aff. ¶ 9.) However, D & G was not the sole attorney consulted during these transactions. Candela also retained an attorney named Kojo Bentil, who drafted a promissory note and a security agreement for the Factory Pond transaction. (Newport Aff. ¶ 9, Ex. D.) In addition, at a July 2008 meeting regarding "Illume tax issues, " attorneys from Patterson Belknap Webb & Tyler LLP were consulted. (Newport Aff. Ex. L.)

Relevant to the instant litigation, significant portions of the "Dance Cuba" film incorporate copyrighted materials for which Illume had signed licensing agreements. (Newport Aff. ¶ 2.) These licensing agreements required that Illume obtain consent from the licensors before any transfer of intellectual property rights could be made. (Newport Aff. ¶ 3.) While there is a dispute as to whose duty it was to obtain the consents, the Complaint alleges that no consents to assignment were ever obtained from the licensors. (Cmpl. ¶ 8.) The Complaint further alleges that the Defendant's failure to obtain or to advise on obtaining the necessary consents to any transfer of copyrighted material in "Dance Cuba" created a cloud on the film's title that prevents Plaintiffs from seeking new investors and completing the film. (Cmpl. ¶ 20; Newport Aff. ¶ 3.)

Plaintiffs commenced this action on December 1, 2011, asserting that Defendant's "failures to properly understand and advise Plaintiffs as to the structure, the transactions and the effect of the documents utilized in the transactions, " constitute (i) negligence, (ii) breach of contract, (iii) breach of fiduciary duties, and (iv) negligent misrepresentation. (Cmpl. ¶¶ 8, 23, 27, 36, 40.) Defendant now seeks dismissal of the Complaint in its entirety. Plaintiffs oppose.

I. Defendant's Motion to Dismiss

Defendant moves to dismiss the Complaint pursuant to CPLR 3211(a)(1) and (a)(7), on the grounds that Newport has failed to plead facts that establish an attorney-client relationship and that Candela has failed to plead facts that establish ...

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