Hallucination Media, LLC v. The Ritz Ybor, LLC (In re Hallucination Media, LLC), 8:16-bk-04116-RCT
| Decision Date | 29 October 2021 |
| Docket Number | Adv. 8:19-ap-00134-RCT,8:16-bk-04116-RCT |
| Parties | In re: Hallucination Media, LLC, Debtor. v. The Ritz Ybor, LLC, N.C. J. Investment Company, Joe Capitano, Jr., Amphitheatre Events, LLC, and John A. Santoro, Defendants. Hallucination Media, LLC, Plaintiff, |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
In re: Hallucination Media, LLC, Debtor.
Hallucination Media, LLC, Plaintiff,
v.
The Ritz Ybor, LLC, N.C. J. Investment Company, Joe Capitano, Jr., Amphitheatre Events, LLC, and John A. Santoro, Defendants.
No. 8:16-bk-04116-RCT
Adv. No. 8:19-ap-00134-RCT
United States Bankruptcy Court, M.D. Florida, Tampa Division
October 29, 2021
MEMORANDUM DECISION AND ORDER GRANTING, IN PART, AND DENYING, IN PART, DEFENDANTS RITZ YBOR, LLC, JOSEPH CAPITANO, JR., AND N.C. J. INVESTMENT COMPANY'S AMENDED MOTION FOR SUMMARY JUDGMENT
Roberta A. Colton, United States Bankruptcy Judge.
THIS PROCEEDING is considered following oral argument on Defendants Ritz Ybor, LLC, Joseph Capitano, Jr., and N.C. J. Investment Company's (collectively, the "Ritz Defendants") Amended Motion for Summary Judgment (Doc. 61) (the "Motion"), the affidavit of Joseph Capitano, Jr. ("Mr. Capitano") in support of the Motion (Doc. 62), Plaintiff
Hallucination Media, LLC's response in opposition (Doc. 73) (the "Response"), and the Ritz Defendants' reply (Doc. 78).
The Ritz Defendants seek summary judgment on all counts of Plaintiff s complaint, [1]primarily based upon, but not limited to, the operation of the statute of frauds. As to Count I, the Ritz Defendants assert that there is no written agreement to share control, profits, and losses necessary to establish a partnership nor, additionally, to legally bind the other party necessary to establish a joint venture. Similarly, as to Count II, the Ritz Defendants assert that there is no written agreement providing Plaintiff with a right of first refusal. As to Count III, the Ritz Defendants contend not only that there is no written lease agreement but also that the agreement alleged does not provide for the exclusive right to possess the real property necessary to establish a "lease" that would be subject to the provisions of Chapter 83 of the Florida Statutes. Regarding Count IV, the Ritz Defendants assert that Mr. Capitano cannot be liable for tortious interference as he was, at all relevant times, not considered a separate entity to the alleged contracts as he was acting as an agent for Ritz Ybor and not in his individual capacity. Further, the Ritz Defendants claim that they were within their rights to terminate the relationship with Plaintiff and that even if that were not the case, their actions would amount to a breach of contract which cannot be converted into a tort. Finally, as to Count V, the Ritz Defendants argue that the claim fails because the statute of frauds may not be circumvented by an action for fraud.
Citing the emails exchanged and documents attached to those emails, Plaintiff disagrees with the Ritz Defendants' argument that writings sufficient to satisfy the statute of frauds do not exist. But as an initial matter, Plaintiff argues that the Motion must be denied because the Ritz Defendants did not raise the statute of frauds as an affirmative defense in their answer. The
Response answers the Motion's remaining arguments, if at all, largely with conclusory denials.[2]
In support of the Motion, the Ritz Defendants proffered Mr. Capitano's affidavit. Plaintiff offers no evidence counter to Mr. Capitano's affidavit, other than a declaration of one of its principals averring to the statements made in the Response. The Response, however, is a hodge-podge of factual assertions, unsupported denials, arguments that are largely conclusory, and Plaintiffs conclusions of law. The Court considers only the properly supported factual assertions in the Response in rebuttal to Mr. Capitano's affidavit.[3]
The Court has considered the summary judgment record, together with the relevant case law, and the arguments of counsel made at oral argument on the Motion. For the reasons stated below, the Court concludes that the Motion should be granted, in part.
Undisputed Facts
Before its own Chapter 7 bankruptcy, [4] Defendant Ritz Ybor, LLC ("The Ritz") operated a special events venue located at 1503 East 7th Avenue, Tampa, Florida 33605 (the "Venue"). The Venue is owned by Defendant N.C. J. Investment Company ("NCJ"). Mr. Capitano was the managing member of The Ritz. Although a shareholder in NCJ, Mr. Capitano did not control, legally or otherwise, NCJ nor did he, at any relevant time, act on behalf of NCJ.[5]
Plaintiff and its managing members, Bryan Nichols and Steven McClure, [6] promoted and produced "club nights" at the Venue, i.e., dance events with a disk jockey, on most Friday nights
from August 2013 to May 6, 2016, some Saturday nights, and various other nights from time to time (the "Promoted Events").[7] The Promoted Events generated door and bar revenues, which the parties agreed to share.[8] According to the Ritz Defendants, Plaintiff shared in these revenues in the same manner as other promoters as part of The Ritz's "customary course of business operations."[9] Mr. Capitano, in his individual capacity, did not share in the revenues generated.[10]Whether the revenue sharing agreement among the parties extended into a larger sharing of profits and losses is disputed.
Expenses for the Promoted Events were also shared.[11] With limited exceptions, the Ritz Defendants provided and paid for personnel and supplies associated with the Promoted Events.[12]Certain improvements were made to the Venue at the suggestion of Plaintiff, which were paid for by the Ritz Defendants.[13] According to Plaintiff, regardless of "who wrote the check," it was agreed that the costs of the improvements were obligations of the partnership.[14] Similar to the dispute involving the revenue sharing agreement, whether the sharing of expenses among the parties was part of a larger sharing of profits and losses is disputed.
The nature and extent of the business relationship among the parties, if any, is documented in a series of email exchanges that occurred in June 2013, September 2014, and December 2015 through January 2016.[15] In the latter most exchange, it is clear that the relationship had soured as they began to discuss a possible end to the relationship.[16]
The relationship among the parties apparently came to an end in April 2016, with
Plaintiffs final promoted event at the Venue occurring on May 6, 2016.[17] Plaintiffs bankruptcy was filed less than a week later.
The Venue was marketed and used for events other than the "club nights" promoted by Plaintiff. Plaintiff did not have exclusive rights to host or promote events at the Venue.[18]
Plaintiff sues the Ritz Defendants based upon the unraveling of the business relationship. The nature and extent of that business relationship is the central issue in this litigation.
Positions of the Parties
Though they concede there was some form of a business relationship in existence, the Ritz Defendants assert that any relationship Plaintiff had was solely with The Ritz and, at most, Plaintiff was granted a license to use the Venue during limited hours and days on a week-to-week basis. Plaintiff contends the relationship was a partnership or joint venture and further that it held a three-year lease to the Venue on certain nights with a right of first refusal on future agreements for those nights.
Summary Judgment
Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."[19] The mere existence of a factual dispute will not defeat a properly supported motion for summary judgment.[20] "Only the existence of a genuine issue of material fact will preclude summary judgment."[21] The initial burden of showing that there are no genuine issues of material fact is
borne by the moving party.[22]
If the moving party satisfies its initial burden, the burden shifts and "the nonmoving party must then designate specific facts showing the existence of genuine issues of material fact."[23] In so doing, the nonmoving party may not rely on the "mere allegations or denials of [its] pleadings."[24] Instead, the nonmoving party must offer facts supported by evidence which can be reduced to an admissible form.[25] Nonetheless, "[i]f there is a conflict between the parties' allegations or evidence, the nonmoving party's evidence is presumed to be true and all reasonable inferences must be drawn in the nonmoving party's favor."[26]
Discussion
To begin, the summary judgment record leaves something to be desired. The parties fundamentally disagree as to the import of the email discussions that, indisputably, form the factual predicate for Plaintiffs claims. But with the benefit of oral argument, the Court concludes that summary judgment is appropriate, at least in part.
Pleading the Statute of Frauds
The Ritz Defendants contend Plaintiffs claims cannot stand as they are based upon agreements not reduced to writing and therefore do not comply with the statute of frauds. Plaintiff strongly disagrees but, as an initial matter, responds that the Ritz Defendants have waived any such claim by failing to plead the statute of frauds as an affirmative defense.
While the Court agrees with Plaintiff that the Ritz Defendants did not plead the statute of frauds in their answer, [27] it does not agree that the Ritz Defendants are therefore barred from
asserting the defense now. As the Ritz Defendants correctly note, courts have held that a failure to plead an affirmative defense as required by Rule 8(c) of the Federal Rules of Civil Procedure ("Rule(s)")[28] is not necessarily fatal and that the unpled affirmative defense may nevertheless be asserted and further proven at trial provided the plaintiff is on notice of the defense.
When a plaintiff has notice that an affirmative defense will be raised at trial, the defendant's failure to comply with Rule 8(c) does not cause the plaintiff any prejudice. And, when the failure to raise an affirmative defense does not prejudice the...
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