79 F.3d 241 (2nd Cir. 1996), 47, Gil Enterprises, Inc. v. Delvy

Docket Nº:47, Dockets 94-9265, 94-9305.
Citation:79 F.3d 241
Party Name:38 U.S.P.Q.2d 1042 GIL ENTERPRISES, INC., Plaintiff-Appellant-Cross-Appellee, v. Richard DELVY, doing business as Miraleste Music, Defendant-Appellee-Cross-Appellant. Richard DELVY, Counter-Claimant, v. GIL ENTERPRISES, INC., Counter-Defendant.
Case Date:March 12, 1996
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 241

79 F.3d 241 (2nd Cir. 1996)

38 U.S.P.Q.2d 1042

GIL ENTERPRISES, INC., Plaintiff-Appellant-Cross-Appellee,

v.

Richard DELVY, doing business as Miraleste Music,

Defendant-Appellee-Cross-Appellant.

Richard DELVY, Counter-Claimant,

v.

GIL ENTERPRISES, INC., Counter-Defendant.

No. 47, Dockets 94-9265, 94-9305.

United States Court of Appeals, Second Circuit

March 12, 1996

Argued Sept. 6, 1995.

Page 242

Appeal from a judgment entered in the United States District Court for the Southern District of New York (Lowe, J.), denying in its entirety plaintiff-appellant's complaint and granting defendant-appellee's counterclaim declaring the contract between the parties validly terminated. Reversed and remanded.

Scott L. Baker, Silverman & Shulman, P.C., New York City (Jonathan J. Ross, on the brief), for plaintiff-appellant.

Robert W. Cinque, Cinque & Cinque, P.C., New York City (James P. Cinque, on the brief), for defendant-appellee.

Before WINTER, ALTIMARI and McLAUGHLIN, Circuit Judges.

ALTIMARI, Circuit Judge:

Plaintiff-appellant Gil Enterprises, Inc. ("Gil") appeals from a judgment entered in the United States District Court for the Southern District of New York (Lowe, J.), denying in its entirety plaintiff-appellant's complaint alleging, among other things, breach of contract and tortious interference with a business relationship against defendant-appellee Richard Delvy ("Delvy") (d/b/a "Miraleste Music") and granting Delvy's counterclaim declaring his contract with Gil validly terminated. Gil contends on appeal that 1) the district court erred in determining that a sufficient "demand" had been made upon Gil to justify termination of the contract; 2) the district judge erred in failing to disqualify herself from presiding over the bench trial; and 3) the co-owner of the copyright under the contract was an indispensable party without whom a judgment could not properly be entered. While we find Gil's latter two arguments meritless, the district court mistakenly concluded that Delvy made a "demand" upon Gil within the meaning of the Agreement. Accordingly, we reverse and remand for proceedings consistent with this opinion.

BACKGROUND

Gil is a New York corporation that exploits music copyrights throughout the world. On May 24, 1963, Gil entered into a contract (the "Gil Agreement" or "Agreement") with Richard Delvy and John Marascalco ("Marascalco") (d/b/a "Robin Hood Music Co.") (collectively the "Owners"), the co-owners of the copyright to the popular song "Wipe Out" (the "Composition"). Under the Gil Agreement, Gil acquired the exclusive rights to exploit the Composition throughout the British Commonwealth of Nations and Mandated Territories (including Canada), the Republic of Ireland, and South Africa (collectively the

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"Licensed Territories") for the life of the copyright.

Under the terms of the Gil Agreement, Gil retained 50% of the royalties acquired through the exploitation of the Composition. By 1988, it became clear to the Owners that modern sub-licensing contract rates were significantly lower than 50%. Accordingly, the Owners sought to renegotiate their Agreement with Gil. When Gil refused to renegotiate, the Owners declared that the Agreement was terminated and entered into a new distribution agreement under more favorable terms with Minder Music Limited.

When the Owners terminated the Agreement, Gil filed suit in New York Supreme Court alleging, among other things, breach of contract and tortious interference with a business relationship. Ultimately, Marascalco, who was reluctant to join in any legal action against Gil, entered into a settlement agreement with Gil. Under the settlement agreement, Marascalco was paid several thousand dollars in past royalties plus interest in exchange for a sworn affidavit stating:

I can unequivocally state that I have been duped by Delvy into believing that Gil had breached the terms of the Subpublication Agreement and that [he] could effectively terminate same and that a new and better deal could be made for us with respect to the exploitation of the Composition in the Licensed Territory.

* * *

On behalf of Robin Hood, I state and represent that insofar as the interests of Robin Hood are concerned with respect to the Composition, the Subpublication Agreement has not been breached and that it has not been terminated nor has it expired.

After settling the suit with Marascalco, Gil dropped the New York State action and reinstated the suit in federal court, this time only against Delvy. Delvy counterclaimed, seeking a declaration that the Agreement had been legally terminated and that Gil has no further right to exploit the Composition.

The federal action was tried before Judge Mary Johnson Lowe. Throughout the trial, Judge Lowe excoriated Gil's attorney for engaging in improper questioning and acting in bad faith. After one instance of such questioning mid-trial, Judge Lowe stated:

Look, this has constantly been one problem after another. This [is] a non-jury trial. And I think that I'm going to just declare a mistrial here, send this to somebody else, and let them try it, I cannot go on this way, I think, because this plaintiff and this defendant are entitled to a fair and impartial trial.

And you know, normally, Mr. Shulman, I find that your conduct in this trial has just made it necessary for me to constantly stop you from doing things that you have just done. You do it repeatedly. You are not conducting this as a trial. And if I am going to render an impartial judgment, I am really upset by...

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