United States District Court, S.D. New York
OPINION AND ORDER
EDGARDO RAMOS, U.S.D.J.
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.
following reasons, Defendants' motion is GRANTED in part
and DENIED in part.
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
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.
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.
Prior Litigation and Settlement Agreements
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,
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.
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.
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.
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.
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.
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.
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.
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.
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.
Notice of Default and Demand to Cure
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.
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 ¶ 49. On
May 4, 2015, AREC's counsel sent an email to