Croce v. Kurnit

• Decision Date: 30 September 1982
• Docket Number: No. 78 Civ. 3340 (RWS).,78 Civ. 3340 (RWS).
• Parties: Ingrid CROCE, Individually, as heir of the Estate of James Joseph Croce, also known as Jim Croce, and as Guardian of Adrian Croce, Minor, Plaintiff, v. Philip S. KURNIT; Thomas R. Picardo, Jr., a/k/a Tommy West; Dennis Minogue, a/k/a Terry Cashman; Cashman, Pistilli & West; Blendingwell Music, Inc.; Cashwest Productions, Inc.; and Lifesong Records, Inc., Defendants. v. TIME IN A BOTTLE, INC., Additional Defendant on Counterclaims.
• Court: U.S. District Court — Southern District of New York

565 F. Supp. 884

Ingrid CROCE, Individually, as heir of the Estate of James Joseph Croce, also known as Jim Croce, and as Guardian of Adrian Croce, Minor, Plaintiff, v. Philip S. KURNIT; Thomas R. Picardo, Jr., a/k/a Tommy West; Dennis Minogue, a/k/a Terry Cashman; Cashman, Pistilli & West; Blendingwell Music, Inc.; Cashwest Productions, Inc.; and Lifesong Records, Inc., Defendants. v. TIME IN A BOTTLE, INC., Additional Defendant on Counterclaims.

No. 78 Civ. 3340 (RWS).

United States District Court, S.D. New York.

September 30, 1982.

Donovan, Leisure, Newton & Irvine, New York City, for plaintiff; Louis C. Lustenberger, Jr., Howard R. Reiss, Joseph L. Clasen, III, New York City, of counsel.

Goldschmidt, Fredericks & Oshatz, New York City, for defendants; Barry I. Fredericks, New York City, of counsel.

OPINION

SWEET, District Judge.

This diversity action, a portion of which was tried to the court, presented facts which evoked memories of "A Star Is Born," except that the star in this case, James Croce, died all too soon after his ascendancy. The complaint filed by Ingrid Croce, his widow and heir ("Mrs. Croce"), a California resident, sought to obtain certain damages from the defendants, citizens of states other than California, arising out of an alleged breach of certain contracts as well as rescission of the contracts on the ground of fraud, and breach of fiduciary duty. On the findings and conclusions set forth below, judgment will be granted to the defendants dismissing the claims of unconscionability and breach of fiduciary duty against Cashman and West and granting Croce's breach of fiduciary claim against Kurnit. The defendants' motion for judgment notwithstanding the verdict is denied.

Prior Proceedings

This action was filed by Mrs. Croce on July 21, 1978 against Philip Kurnit ("Kurnit"), a New Jersey resident and a member of the bars of New York, New Jersey and California, Thomas R. Picardo, a New York resident, also known as Tommy West ("West"), Dennis Minogue, also known as Terry Cashman ("Cashman"), a New Jersey resident, Cashman, Pistilli & West ("CP & W"), a New York partnership, Blendingwell Music, Inc. ("Blendingwell"), a New York Corporation, Cashwest Productions, Inc. ("Cashwest"), a New York corporation and Lifesong Records, Inc. ("Lifesong"), a New York corporation and a subsidiary of Blendingwell. Kurnit, West and Cashman are officers of Blendingwell, Cashwest and Lifesong. The complaint set forth nine counts containing causes of action for breach of fiduciary duty (Count 1), fraud (Count 2), unconscionability (Count 3), breach of contracts (Counts 4, 5 and 6), replevin (Count 7), conversion (Count 8) and breach of fiduciary duty (Count 9).

The action was initially assigned to Honorable Thomas P. Griesa and subsequently reassigned to the Honorable Abraham Sofaer, both of whom recused themselves, and then to the Honorable Lawrence Pierce. Upon Judge Pierce's elevation to the Second Circuit, the case was then reassigned to this court. Magistrate Sinclair supervised discovery which turned out to be a difficult and arduous task.

Two motions for summary judgment were made and denied, one by Judge Sofaer on August 1, 1979 and one by this court on May 20, 1982. In addition various discovery and pretrial motions were made, and at the request of the defendants the court directed by its opinion of May 20, 1982 that the trial be bifurcated, that the contract issues, Counts 4, 5, 6, 7 and 8, be tried first, to be followed by the trial of Counts 1, 2, 3 and 9.

From June 3, 1982 to June 24, 1982 the contract and conversion issues were tried to a jury which rendered a special verdict¹ and certain other claims were decided by the court as a matter of law. On June 28, 1982, Mrs. Croce stipulated to the withdrawal of her claim for replevin, waived the jury and stipulated to a dismissal of Count 2. From June 28, 1982 to July 1, 1982 the remaining Counts, 1, 3 and 9, claiming fraud, unconscionability and breach of fiduciary duty were tried to the court. It is upon the entire record that the following findings of fact and conclusions of law rest.

Findings of Fact

James Joseph Croce ("Jim Croce") was born in 1943 and in the course of his schooling attended Villanova University. There he met Ingrid, who subsequently became his wife, and also Tommy West, who became both his friend and, as it developed, a business associate. During the college years Jim Croce sang, played guitar and wrote songs, as did West.

After graduation from college, Jim Croce sought to shape a career out of his interest in music, played and sang in coffee houses, and developed both his own style and his own music. He managed to produce a record album entitled Facets containing certain of his songs which he performed. He sent the album to Tommy and sought to interest the latter in his work.

West in the meantime also developed a career in music, producing, singing and playing for commercials. He had met Cashman with whom he collaborated as well as Kurnit, an attorney who had been working at ABC Records, Inc. By 1968 all three, West, Cashman and Kurnit were at CBS, Cashman, West in the music department and Kurnit serving in the legal department. The two musicians together with Eugene Pistilli ("Pistilli") decided to enter the record business on their own and set up CP & W for that purpose. Kurnit was also a participant in the enterprise.

In the summer of 1968, while Kurnit was still at CBS, Jim and Ingrid Croce arrived in New York, stayed with West, and met Kurnit, who was introduced to them as "the lawyer." West and the Croces discussed the possibility of CP & W producing a record by Jim Croce. The outlines of the contractual arrangements were discussed, the Croces returned to Pennsylvania and according to West, proposed contracts were taken to them after their trip to New York and before their return to New York on September 17, 1968. Whether or not that occurred (Mrs. Croce maintains it did not), the Croces did not conduct any meaningful review of the contract until September 17, 1968.

On that date the Croces were in New York again, staying with the Wests. They met Kurnit for the second time. He outlined the contract terms to them in a two to three hour meeting. According to Kurnit, there was no negotiation although a minor change in the proposed contract was made. The Croces signed three agreements, a recording contract with CP & W, a publishing contract with Blendingwell and a personal management contract also with Blendingwell ("the contracts"). The Croces were unrepresented, and they were not advised to obtain counsel by Kurnit who signed the contracts on behalf of the corporate entities. Kurnit was known to the Croces to be a participant with Cashman, Pistilli and West in their enterprises. The Croces did not enter into any retainer agreement with Kurnit, were never billed by him in connection with the contracts, and aside from the meeting of September 17, received no advice from him concerning the contracts.

The contracts that were executed on September 17, 1968 provided that Croce would perform and record exclusively for CP & W, as well as the terms under which all the Croce's songs would be published and managerial services would be provided for the Croces. The contracts placed no affirmative requirements on the defendants other than to pay each of the Croces approximately $600 a year and to make certain royalty payments in the event that music or records were sold. The duration of the contracts was seven years if options to extend were exercised by the defendants. All rights to the Croces' musical performances and writings were granted to the defendants. The management contract was assignable.

The expert testimony offered by Mrs. Croce focused on the effect of the assignability of the management contract, the lack of any objective threshold to be achieved before the exercise of options, and the interrelationship of the three contracts. In addition other significant provisions were cited as being unfavorable to the Croces which would have been the subject of negotiation had the Croces in September, 1968 been represented by the expert retained in 1982. These included the term of the contracts, the royalty rate and its escalation, a revision of the copyrights, a minimum recording sides obligation, and the time for making objections to royalty statements.

However, certain of the provisions which were under attack were also contained in the forms published by various organizations involved in the entertainment industry, and there was no evidence presented in this action, meticulously prepared by able counsel on both sides, which established that the terms of these contracts differed significantly from others prepared by Kurnit on behalf of the defendants. These contracts include many terms of art and are customarily the subject of hard bargaining in the event that the artist and the producer both have established economic power. Here, however, no significant changes were made in the contracts as initially proposed by Kurnit on behalf of the other defendants.

After the contracts were executed, the parties undertook their performance. In the summer of 1969 the recording contract was assigned to Interrobang Productions, Inc. ("Interrobang"), as was the management contract a year later. Cashwest is the successor in interest to Interrobang. The management contract was assigned to Showcase Management, a company in which CP & W had an interest, a demonstration record was prepared (a "demo") and thereafter Capital Records undertook to produce a Croce recording under the direction of Nick Vanet. This recording was published in the spring of 1969 and after its publication, Jim Croce worked hard to promote it. By the winter of 1969-70 it was apparent the album was a failure, and Jim turned to other pursuits.

In the fall of 1968 Kurnit represented the Croces in connection with a lease. In April, 1969 Kurnit listed his...