Art & Fashion Grp. Corp. v. Cyclops Prod., Inc.

• Decision Date: 28 August 2014
• Parties: ART AND FASHION GROUP CORPORATION, et al., Plaintiffs–Appellants–Respondents, v. CYCLOPS PRODUCTION, INC., et al., Defendants–Respondents–Appellants.
• Court: New York Supreme Court — Appellate Division

120 A.D.3d 436
992 N.Y.S.2d 7
2014 N.Y. Slip Op. 06008

ART AND FASHION GROUP CORPORATION, et al., Plaintiffs–Appellants–Respondents,
v.
CYCLOPS PRODUCTION, INC., et al., Defendants–Respondents–Appellants.

Supreme Court, Appellate Division, First Department, New York.

Aug. 28, 2014.

[992 N.Y.S.2d 9]

Mark L. Cortegiano, Middle Village, for appellants-respondents.

Aaron Richard Golub, Esquire, P.C., New York (Nehemiah S. Glanc of counsel), for respondents-appellants.

MOSKOWITZ, J.P., RICHTER, MANZANET–DANIELS, CLARK, KAPNICK, JJ.

Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered on or about February 24, 2012, which granted defendants' CPLR 3211(a) motion to dismiss the complaint to the extent of dismissing the fraud cause of action and dismissing the complaint as against defendants Cyclops, Albert Watson, Elizabeth Watson and Michael Jurkovac, unanimously modified, on the law, to reinstate the breach of the joint venture agreement and unjust enrichment causes of action as against the individual defendants, to dismiss the conversion/property damage cause of action, and otherwise affirmed, without costs.

In this action, plaintiffs Art and Fashion Group Corporation (AFG) and Pier 59 Studios L.P. (Pier 59) allege that they entered into an oral joint venture agreement with defendants Cyclops, Cyclops Production, Inc. (CPI), Cyclops, LLC (CL), Albert Watson, Elizabeth Watson and Michael Jurkovac. According to the complaint, plaintiffs and defendants formed 359 Productions, LLC to operate a joint venture to produce defendants' photo shoots and advertising campaigns. The complaint alleges that the parties agreed to operate on a 50/50 basis, to share profits and losses equally, and to pay their respective share of all the expenses of the joint venture, including rents and salaries. Additionally, the parties agreed that all of defendants' campaigns would be produced through 359 Productions and shot exclusively at Pier 59's studios.

The complaint further alleges that defendants breached the joint venture agreement by failing to produce their campaigns through 359 Productions and by conducting the photo shoots at locations other than Pier 59's studios. Plaintiffs allege that Pier 59 paid the salaries of the corporate defendants' employees, and that defendants used plaintiffs' offices, facilities and the services of plaintiffs' employees for their own exclusive benefit. Despite receiving these benefits, plaintiffs allege that defendants failed to remit plaintiffs' share of revenue from the campaigns. The complaint asserts causes of action for breach of the joint venture agreement, unjust enrichment, fraud and conversion/property damage.

Defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7) for failure to state a claim and as barred by documentary evidence. The motion court dismissed the complaint in its entirety as against the individual defendants and defendant Cyclops, and dismissed the fraud cause of action as against all defendants. The court denied dismissal of the causes of action for breach of the joint venture agreement, unjust enrichment and conversion/property damage as against CPI and CL. This appeal and cross-appeal ensued.

The motion court correctly denied the portion of the motion seeking dismissal of the claim for breach of the joint venture agreement as against CPI and CL. Accepting the facts as alleged in

[992 N.Y.S.2d 10]

the complaint as true and according plaintiffs the benefit of every possible favorable inference ( see Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ), the complaint sufficiently states a cause of action for breach of a joint venture agreement by...