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Artists Rights Enforcement Corp. v. Estate of Robinson

United States District Court, S.D. New York

March 7, 2017

ARTISTS RIGHTS ENFORCEMENT CORP., Plaintiff,
v.
THE ESTATE OF JOSEPH ROBINSON, JR., LELAND ROBINSON, SUGARHILL MUSIC PUBLISHING INC., a/k/a SUGAR HILL MUSIC PUBLISHING, INC., SUGAR HILL RECORDS INC., Defendants.

          OPINION AND ORDER

          EDGARDO RAMOS, U.S.D.J.

         Artists Rights Enforcement Corp. (“AREC” or “Plaintiff”) brings this action against Defendants The Estate of Joseph Robinson Jr., Leland Robinson, Sugarhill Music Publishing Inc., a/k/a Sugar Hill Music Publishing Inc. (“SMP”) and Sugar Hill Records Inc. (together, the “Defendants”). Before this Court is the Defendants' motion to dismiss on the grounds that: (1) Plaintiff does not have standing to assert its declaratory judgment claim, (2) this Court should abstain from exercising jurisdiction as there is a parallel pending state court action, and (3) Plaintiff has failed to join a necessary party whose joinder would destroy diversity.

         For the following reasons, Defendants' motion is GRANTED in part and DENIED in part.

         I. Background[1]

         Between July 17, 1980 and January 28, 1981, the following songwriters, artists and music publishers entered into five separate Exclusive Songwriters Agreements with SMP: Melvin Glover, Eddie Morris, Nathaniel Glover Jr., Guy Todd Williams, The Estate of Robert Keith Wiggins, Sharon Green Jackson, Keith Caesar, Kevin Smith, Rodney Stone and Reginald A. Payne (together, the “Songwriters”). Compl. at ¶ 12. The Exclusive Songwriters Agreements, which were signed by Joseph Robinson Jr. on behalf of SMP, gave SMP[2] control over the Songwriters' creative works and required SMP to, inter alia, make royalty payments and provide semi-annual royalty reports on February 15 and August 15 of each year. Id. at ¶¶ 12, 14, 15. However, Defendants failed to perform these obligations for two decades. Id. at ¶ 17.

         Accordingly, between April 15, 1999 and April 23, 2003, the Songwriters each signed letter agreements with AREC, an entity specializing in the collection of royalties and other fees due songwriters and music publishers from their artistic material or musical performances. Id. at ¶¶ 11, 17. AREC was retained to collect any and all royalties and other assets owed to them, and to obtain an accounting for such royalties. Id. at ¶ 17. Despite AREC's retention, Defendants continued to refuse to perform their obligations, which has led to multiple lawsuits in both state and federal courts, two of which have ended in settlement agreements.

         A. Prior Litigation and Settlement Agreements

         In 2001, these same Songwriters filed an action against Joseph Robinson Jr., Leland Robinson, the Sugarhill entities, other members of the Robinson family and other entities owned or controlled by the Robinsons (together, the “Robinson Defendants”) in the United States District Court for the Southern District of New York, entitled Caesar v. Sugarhill (“Prior Federal Action”) to recover royalties and other fees. Id. at ¶ 19. AREC was not a party to that action. Complaint, Caesar v. Sugarhill, No. 01 Civ. 6180 (RMB) (S.D.N.Y. July 9, 2001).

         The Prior Federal Action settled on June 14, 2002. Compl. at ¶ 20. Pursuant to the settlement, the Robinson Defendants were court-ordered to pay AREC, on behalf of the Songwriters, $225, 000 in nine separate installments of $25, 000 each, and to enter into a written Settlement Agreement (“2002 Settlement Agreement”). Id. at ¶ 21. The 2002 Settlement Agreement obligated the Robinson Defendants to, inter alia, give AREC copies of all relevant licenses from 1997, direct third parties to pay royalties directly to AREC, provide an accounting of the royalties due, and pay AREC the Songwriters' royalties. Id.

         The Songwriters' troubles did not end with this settlement. The Robinson Defendants only paid the first installment payment and refused to execute the 2002 Settlement Agreement. Id. at ¶ 22. This caused the parties to appear before Judge Berman on March 12, 2003 during which the parties agreed to a rider to be signed within ten days, and to execute the 2002 Settlement Agreement as drafted by the Songwriters' counsel. Id. However, the Robinson Defendants again refused to execute the 2002 Settlement Agreement, or to abide by its terms or the terms of the rider. Id. at ¶ 23.

         The Robinson Defendants also allegedly retained an attorney to write a letter to AREC, purportedly on behalf of Melvin Glover and Eddie Morris, stating that the two songwriters wished to withdraw from the yet unexecuted settlement. Id. at ¶ 24. This led to another conference before Judge Berman on April 15, 2003. Id. at ¶¶ 24-25. The Songwriters' counsel proffered declarations signed by Melvin Glover and Eddie Morris specifically disclaiming that they had retained separate counsel and affirming that they did not wish to withdraw from the 2002 Settlement Agreement. Id. at ¶ 26. Melvin Glover and Eddie Morris also reaffirmed that AREC was their appointed agent. Id. Judge Berman ORDERED this appointment and directed the Robinson Defendants to comply with the 2002 Settlement Agreement and its rider, which obligated the Robinson Defendants to deal directly and solely with AREC. Id. at ¶¶ 26-27. Despite this order, the Robinson Defendants persisted in refusing to sign the 2002 Settlement Agreement or comply with its terms. Id. at ¶ 28.

         On May 12, 2003, AREC filed a state action in the New York County Supreme Court entitled Artists Rights Enforcement Corp. v. Joseph Robinson, et al., Index No. 601495/03 (“First State Action”) as a third party beneficiary under the court orders, the 2002 Settlement Agreement and rider against the Robinson Defendants with the exception of Leland Robinson. Id., Cinque Decl. (Doc. 19) Exhibit B at ¶ 57. AREC sought compensatory and punitive damages for breach of contract, tortious interference with contractual relations, tortious interference with prospective economic advantage, breach of third party beneficiary contracts and declaratory relief. Compl. at ¶ 28.

         The Robinson Defendants executed the 2002 Settlement Agreement on June 13, 2003, during the pendency of the First State Action. Id. at ¶ 29. However, the Robinson Defendants refused to sign the agreed upon rider and instead signed a unilaterally modified rider which was rejected by the Songwriters. Id. Furthermore, the Robinson Defendants only paid the first three of the nine required payments. Id. at ¶ 30. Thus, on August 12, 2004, AREC and the Robinson Defendants executed a rider extending the Robinson Defendants' reporting and payment deadlines. Id. at ¶¶ 30-31. The Robinson Defendants again failed to comply with those terms, only providing AREC $3, 892.92 on November 5, 2004 without indication as to the source of the payment or an accounting. Id. at ¶¶ 32, 35.

         Moreover, the Robinson Defendants allegedly hired an attorney for a second time who purported to represent Melvin Glover. Id. at ¶ 34. The attorney allegedly sent a letter to the Robinson Defendants on September 21, 2004 which stated that Melvin Glover wished to withdraw from the settlement. Id. The Robinson Defendants drafted another letter, purportedly signed by Eddie Morris, which also stated that Eddie Morris wanted to withdraw from the settlement. Id. AREC was not provided with copies of these letters though they would alter AREC's rights. Id.

         On July 17, 2007, the parties agreed to another settlement agreement ending the First State Action (“2007 Settlement Agreement”). Id. at ¶ 36. The 2007 Settlement Agreement reaffirmed the 2002 Settlement Agreement as modified by the rider. Id. The Robinson Defendants agreed to make 12 semi-annual settlement payments totaling $268, 000 over six years directly to AREC, provide copies of all licenses directly and only to AREC, and directly pay AREC any amounts due and owing to the Songwriters. Id. The 2007 Settlement Agreement also provided that if either party receives a license request or a payment for a license from a third party, and does not inform the other party within fifteen days, the party who received payment shall owe the other the payment due, as well as a bonus in the amount of twenty percent of the amount otherwise owed. Id. at ¶ 37.

         Even though the Robinson Defendants had entered into two settlement agreements, they continued to fail to fully abide by their obligations. At the end of 2010 and beginning of 2011, yet another attorney who purported to represent Melvin Glover and Eddie Morris demanded that the record companies and Defendants make the royalty payments to the two songwriters instead of AREC. Id. at ¶¶ 38-39, 42. On August 1, 2011, Defendants sent a letter to AREC, notifying AREC of this demand. Id. at ¶ 42. Furthermore, AREC has not received any royalty statements or payments for the Songwriters from the Defendants since 2010 even though certain of the Songwriters' works have been licensed repeatedly after 2010. Id. at ¶¶ 16, 43.

         In response, AREC brought another action in the New York County Supreme Court entitled Artists Rights Enforcement Corp. v. Joseph Robinson, et al., Index No. 652582/2012 on July 25, 2012 (“Second State Action”), which is currently pending. Id. at ¶ 45. This time, AREC brought the action on behalf of Melvin Glover and Eddie Morris against Joseph Robinson, Jr. and other Robinson-controlled entities seeking breach of contract damages and declaratory judgment. Id.

         B. Notice of Default and Demand to Cure

         On April 1, 2015, AREC also sent Notice of Default and Demand to Cure letters to Defendants on behalf of all of the Songwriters. Id. at ¶ 46. The letters demanded full and complete payment of all royalties and delivery of the royalty statements not previously provided from January 1, 2007. Id. at ¶ 47. The letters further stated that Defendants' failure to do so would be a material breach of the Exclusive Songwriters Agreements, and that the right to terminate the agreements might be exercised. Id. at ¶ 48.

         Defendants responded to AREC's letters on April 29, 2015 stating that (1) the Defendants had accounted and made payments to AREC up until 2010, at which point they were notified by Melvin Glover and Eddie Morris that the two songwriters' agency relationship with AREC was terminated, and (2) that the Second State Action will decide who is entitled to royalties and in what amount. Id. at ΒΆ 49. On May 4, 2015, AREC's counsel sent an email to Defendants' ...


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