United States District Court, S.D. New York
Qube Films Ltd., Navid Soofi, and Matt Kelley Films, Ltd., Plaintiffs,
Bert Padell, Padell and Company, T.D. Bank N.A., Defendants.
OPINION AND ORDER
ALLISON J. NATHAN, District Judge.
Before the Court is Defendant TD Bank, N.A.'s motion to dismiss Plaintiffs' Amended Complaint with respect to the claims asserted against TD Bank only, which include Plaintiffs' second cause of action for breach of fiduciary duty, fourth cause of action for negligence, fifth cause of action for gross negligence, and sixth cause of action for tortious interference. Defendants Bert Padell and Padell and Company have not moved to dismiss any of Plaintiffs' causes of action asserted against them. For the reasons set forth herein, Defendant TD Bank's motion is GRANTED and all claims against TD Bank are dismissed.
The facts underlying the current dispute are somewhat complicated and must be set forth in some detail to fully understand the relationship among the parties and the events that give rise to this lawsuit. The facts as outlined here are taken from the Plaintiffs' Amended Complaint and are assumed true for purposes of the motion to dismiss. Krassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 237 (2d Cir. 2007).
Plaintiffs Qube Films, Ltd., Navid Soofi, and Matt Kelley Films, Ltd. are film producers. Am. Compl. ¶ 2. In early 2011, Qube Films and Kelley Films obtained the rights to a script entitled "The Salesman, " and both parties set out to secure the necessary funding so that the film could be produced. Am. Compl. ¶ 7. At some point, Qube Films and Kelley Films encountered Napoleon Grier of Napoleon Grier Enterprises ("NGE") who informed Plaintiffs that he could raise the funds for their film through his network of investors and that Bert Padell, an accountant and attorney in the film industry, could facilitate the structuring and implementation of the financing transaction. Am. Compl. ¶¶ 8-9.
In March 2011, Grier proposed a structure for the transaction, which would be completed with the assistance of Ark Capital Ventures, LTD ("Ark") and Vaughn Richmond. Am. Compl. ¶ 11. Padell's attorney, Bruce Baldinger, prepared a series of agreements for the transaction with the assistance of Grier and Padell. Am. Compl. ¶ 11. Under the agreements, Padell was to act as escrow agent for the funds and would be charged with receiving the funds and keeping the funds at TD Bank before distributing them for the sole benefit of New Co, a corporation created to produce The Salesman. Am. Compl. ¶ 11.
On March 8, 2011, NGE and Ark entered into the first funding agreement with Qube Films ("March 8 Deal Sheet"). Am. Compl. ¶ 12, Ex. 1. The March 8 Deal Sheet lays out the preliminary understanding of the parties with respect to the financing for the film. Ex. 1 at 2. As relevant here, the March 8 Deal Sheet states that "[Matt Kelley Films/Qube Films] will initially deposit the [Qube Films] investment, respectively, into an escrow account at TD Bank located at 90 Fifth Avenue, New York, NY 10011 ref. Bert Padell, IOLA Account pursuant to a mutually agreed upon Escrow Agreement. The escrow agent for this transaction will be Bert Padell." Ex. 1 at ¶ 2. The March 8 Deal Sheet also states that "[t]he escrowed funds will be released to the NewCo in accordance with the Escrow Agreement." Ex. 1 at ¶ 5. The March 8 Deal Sheet is signed by Kelley, Grier, Richmond, and Soofi. Ex. 1 at 2. It is not signed by Padell or TD Bank.
Also on March 8, 2011, Matt Kelley Films, Qube Films, Ark, and Padell executed the escrow agreement referenced in the March 8 Deal Sheet ("Escrow Agreement"). The Escrow Agreement appoints Padell as the escrow agent who "shall open and maintain an account on the terms and conditions set forth herein [ ]." Ex. 2. at 1. It also provides wire transfer instructions to send the funds to Padell at his "TD Bank - Bert Padell ESQ. IOLA Account." Ex. 2. at 1-2.
The core of Plaintiffs' Amended Complaint is Section 5's description of how the escrow property was to be distributed. This section states that "Escrow Agent shall hold the Escrow Property in its possession and disburse the Escrow Property subject to the Depositor [defined as Matt Kelley Films and Qube Films] instructing Escrow Agent that the Conditions Precedent' are satisfied." Ex. 2 at 2. The Escrow Agreement then sets forth two conditions precedent. The first condition precedent states that "Service Provider [defined as Ark] shall produce to Depositor an acceptable Presentation  of a bank instrument that is to be funded." Ex. 2 at 2. The second condition precedent states that "the Funding Bank Institution'  shall, via e-mail and/or facsimile to Depositor, (i) take fiduciary responsibility for delivery of the [bank instrument], (ii) guarantee the execution of an irrevocable funding commitment for [$6, 000, 000.00], and that said amount will be deposited into Depositor's Designated Bank Account' in trust for Salesmen..." Ex. 2. The "Funding Bank Institution" is defined as TD Bank, 90 Fifth Avenue, New York, NY 10011. Ex. 2. Nowhere in Plaintiffs' Amended Complaint do Plaintiffs allege that Matt Kelley Films or Qube Films ever received or even sought an e-mail or facsimile from TD Bank to take fiduciary responsibility for delivery of the bank instrument, which is described as necessary for the condition precedent to be satisfied. Rather, Plaintiffs specifically allege that "TD Bank... acting through its officer Cerwin Cox did not verify the authenticity of Conditions Precedent, ' and take fiduciary responsibility for delivery of the [banking instrument, ' via email or facsimile to [Qube Films and Matt Kelley Films]." Am. Compl. ¶ 33 (emphasis added). The Escrow Agreement also provides "Cerwin Cox" as the "[n]ame of officer of institution who will verify authenticity of Conditions Precedent to Depositor after Depositor's receipt of same via e-mail and/or facsimile, as provided for hereinabove." Ex. 2 at 3. But, as stated above, Plaintiffs do not allege that they ever received or even sought an e-mail or facsimile from Cox to verify the conditions precedent.
The Escrow Agreement goes on to state that "[u]pon Escrow Agent's receipt of Depositor's Instruction via e-mail or facsimile, Escrow Agent shall and is hereby authorized and directed to withdraw from the Escrow Account and pay as" set forth in the Escrow Agreement. Ex. 2 at 3. The remainder of the Escrow Agreement applies almost exclusively to Padell as escrow agent, covering such terms as his liability, compensation, resignation, indemnification, and rights, duties, and immunities. Ex. 2. The Escrow Agreement does not address the rights or responsibilities of the "funding bank institution, " TD Bank. The only signatories are Soofi, Richmond, and Padell. Ex. 2 at 9-10. TD Bank never signed the Escrow Agreement.
Plaintiffs contend that they relied on the language contained in the Escrow Agreement, "TD Bank's role in the transaction, and the protection it provided in deciding to enter the Funding Agreements and transfer the QUBE Funds into the Escrow Account at TD Bank, subject to the terms of the Escrow Agreement." Am. Compl. at ¶ 16. They also allege that "[b]ut for the assurances of TD Bank's role as fiduciary, and guarantor, Plaintiffs would not have entrusted the QUBE Funds to Padell." Am. Compl. at ¶ 16. But nowhere in the Amended Complaint do Plaintiffs allege that they actually received any assurances from TD Bank.
Shortly after the March 8 Deal Sheet and Escrow Agreement were executed, Plaintiffs deposited $510, 000 into the escrow account. Am. Compl. ¶ 18. Grier assured Soofi that $4.8 million in Ark funds would arrive by March 25, 2011 and asked Soofi to deposit an additional $700, 000 into the Escrow Account and release the $500, 000 then on deposit. Am. Compl. ¶ 18. This series of interactions apparently induced Soofi to sign the first amendment to the March 8 Deal Sheet (the "March 11 Deal Sheet"). Am. Compl. ¶ 18. The March 11 Deal Sheet provides that "Qube Films will release the [$500, 000 in] deposited funds to cover investment banking and assignment fees in exchange for pre advice of $6MM bank instrument assigned in the favor of Qube Films - The Salesman to the designated escrow account.... Qube Films will release the $500, 000 immediately upon receipt of the pre advice." Ex. 3 at 1. The March 11 Deal Sheet is signed by Kelley, Grier, Soofi, and Padell. Ex. 3 at 2. It is not signed by TD Bank.
In mid-March 2011, Qube Films deposited an additional $390, 000 into the Escrow Account. Am. Compl. ¶ 19. Plaintiffs allege "[o]n information and belief TD Bank and Cerwin Cox were aware of these transfers of large sums of money into and out of the Escrow Account on or about the time they occurred, and were also aware of the identity of the parties and the nature of the Funding and Escrow Agreements including the duties Plaintiffs were relying on the Bank to perform." Am. Compl. ¶ 20. Plaintiffs do not provide any additional factual allegations in support of the contention that TD Bank or Cox were aware of the "nature of the Funding and Escrow Agreements."
Plaintiffs claim that "[b]ased on the Escrow commitments made by PADELL and TD Bank, Q[ube Films] executed the March 11 Deal Sheet (Exhibit 3) and then signed off on Escrow Instructions on March 14, 2011 (the Escrow Instructions') (Exhibit 4) that Defendants and/or NGE drafted and conveyed to [Qube Films], along with more promises of imminent funding for the Project in a series of phone calls and e-mails." Am. Compl. ¶ 22. Plaintiffs do not allege what commitments TD Bank actually made to ...