Lee v. Mt. Ivy Press, L.P.

• Decision Date: 17 May 2005
• Docket Number: No. 03-P-1496.,03-P-1496.
• Citation: 827 N.E.2d 727,63 Mass. App. Ct. 538
• Parties: Vera LEE v. MT. IVY PRESS, L.P., & others.<SMALL><SUP>1</SUP></SMALL>
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 727

827 N.E.2d 727

63 Mass. App. Ct. 538

Vera LEE v. MT. IVY PRESS, L.P., & others.¹

No. 03-P-1496.

Appeals Court of Massachusetts.

Middlesex.

Argued October 18, 2004.

Decided May 17, 2005.

COPYRIGHT MATERIAL OMITTED

David J. Daly, Wellesley (Timothy J. Daly with him) for Mt. Ivy Press, L.P., & another.

Thomas J. Sartory, Boston (Gary M. Ronan with him) for Palmer & Dodge LLP.

Ramona J. Hamblin for Misha Levy Defonseca.

Frank J. Frisoli, Jr., Cambridge, for the plaintiff.

Present: CYPHER, KANTROWITZ, & BERRY, JJ.

KANTROWITZ, J.

Shortly after the Nazis seized her parents, seven year old Misha Levy² fled alone to the forests and villages of Europe, where she wandered for four years. Along the way, she witnessed atrocities, found herself trapped in the Warsaw Ghetto, and killed a Nazi soldier in self-defense. Miraculously, she survived her ordeal, thanks to her strong will and guile as well as, incredibly, the aid of a pack of wolves, who "adopted" and protected her, providing food, companionship, and affection.

Needless to say, her story was compelling. Fifty years later, she would sell it to Mt. Ivy Press, L.P. (Mt. Ivy), and its sole employee, Jane Daniel, who also convinced soon-to-be former friend Vera Lee to help write the book (or "Work"). Turning to the final chapter of this sad legal tale, the actions of Daniel, her company, and her agent, Palmer & Dodge LLP, ultimately resulted in a judgment of $32.4 million against Daniel and Mt. Ivy, which forms the basis of this appeal.

Facts. Four decades after her ordeal, Defonseca immigrated to the United States, settling in a small town outside of Boston. Only occasionally did she speak about her wartime experiences. By chance, defendant Jane Daniel heard Defonseca speak at an event in New York in 1994 and immediately recognized the enormous earning potential of her story. Daniel was the founder of Mt. Ivy,³ a small publishing company that was run out of the basement of her home. By misrepresenting to Defonseca that she possessed the experience and expertise to market the book, and by promising a first printing of over 50,000 copies, Daniel convinced Defonseca to write her life story. In fact, as Defonseca would painfully discover, Daniel's experience, expertise, and financing ability were all lacking.⁴

Because Defonseca was not a professional writer and English was not her first language, Daniel enlisted the help of her neighbor and friend of twenty years, Vera Lee, to work as a coauthor with Defonseca. Lee was a former professor at Boston College and an experienced author.⁵ Perhaps most importantly, Lee was fluent in French—Defonseca's native language. Despite her friendship with Daniel, Lee was reluctant to involve herself in the project, being aware of Daniel's prodigious history of litigation.⁶ But Daniel overcame Lee's hesitation by touting the potential of the book to be a best seller and by promising that her name would be on the cover.

Mt. Ivy, through Daniel, signed separate publishing agreements with Lee and Defonseca in August, 1995. The agreements—virtually identical—granted Mt. Ivy exclusive rights to publish, distribute, reproduce, sell, and use the Work in exchange for royalty payments to Lee and Defonseca. Both agreements also required that Mt. Ivy would "take out and register copyright in the text in the name of the Author and her collaborator [i.e., Defonseca and Lee] in compliance with the United States copyright laws." If the Work was not delivered, or was "not accepted by the Publisher as being satisfactory for publication," the agreements provided that Mt. Ivy's sole remedy would be the option to terminate the agreements. Finally, the French translation rights in the Work were expressly reserved to Defonseca and Lee.

Lee and Defonseca, with Daniel's knowledge, separately executed a "Collaboration Agreement" providing that they would work together to complete the book, and that both would be given authorship credit on the final product. Lee and Defonseca worked diligently on the book for the next nine months, turning over several drafts to Daniel ahead of schedule, and submitting a third draft on May 15, 1996.

Daniel was becoming more sure of the book's enormous potential to become a best seller. The "buzz" concerning the book was generating a significant amount of interest from foreign publishers. In fact, in July, 1996, well ahead of the book's publication in English, Mt. Ivy sold the German rights, receiving a $135,000 advance.

Daniel began plotting to remove Lee from the project,⁷ falsely complaining to Lee about the quality of the book and Lee's writing ability. Daniel had also begun rewriting the book even before she had received a final draft from Lee.⁸ To facilitate her fraudulent efforts to obtain a personal interest in the book, Daniel executed a work-for-hire agreement with Mt. Ivy in October, 1996.⁹ Neither Lee nor Defonseca knew about this agreement. The trial judge found that the work-for-hire agreement—essentially a contract between Daniel and herself—"was a scam orchestrated by Daniel solely to withhold monies lawfully owed by Mt. Ivy to Lee and Defonseca."

Daniel also drove a wedge between Lee and Defonseca so that, in the words of the trial judge, "it would be easier to defraud them." Daniel threatened to remove Lee's name from the book cover to coerce her into ending contact with Defonseca. Simultaneously, Daniel led Defonseca to believe that Lee was jeopardizing the project with her poor writing and by making herself unavailable to work.

Ultimately, in April, 1997, Mt. Ivy published Misha: A Memoire of the Holocaust Years, without Lee's name on the cover and in a form substantially different from what had been submitted to Daniel by Lee and Defonseca. In clear breach of the publishing agreements, as the jury found, Mt. Ivy also included its own name on the certificate of registration for the copyright.

Despite the personal friction that had developed, Daniel undertook her marketing obligations under the publishing agreement and maintained responsibility for domestic marketing of the book.¹⁰ Her efforts produced minimal results, however, and the book's sales in the United States were poor. In any event, Daniel eventually ceased her promotional efforts in 1997 in accordance with her overall scheme to obtain all of the rights to Defonseca's story.

Daniel hired the Palmer & Dodge Agency (Palmer & Dodge),¹¹ which assigned attorneys Elaine Rogers and Sandra Missakian to handle the foreign marketing and marketing of the dramatic rights. Palmer & Dodge's efforts were more fruitful than Daniel's; the book became a best seller in several European nations, and Palmer & Dodge "pitched" the story to some one dozen movie companies.

However, in its zeal to market the book, Palmer & Dodge overstepped the bounds of its authority. Despite knowledge of the limitation in the publishing agreements reserving all French rights to Defonseca and Lee, Rogers and Missakian marketed the book to French publishers without Defonseca's or Lee's knowledge or consent.¹² Defonseca discovered the efforts when she was contacted independently by a French publisher, Éditions Robert Laffont, whereupon she promptly notified Rogers and Missakian of her rights under the publishing agreement with Mt. Ivy. After some discussion, Defonseca permitted the French contract to proceed, resulting in a publishing agreement between Defonseca, Lee, and Laffont on November 13, 1996 (First French Agreement).

Daniel was not personally involved in the First French Agreement, but quickly found out about it. Once she did, she informed Missakian of Mt. Ivy's alleged copyright interest in the Work, see note 9, supra, and insisted that Mt. Ivy be included in the contract. Missakian redrafted the contract (Second French Agreement) to include Mt. Ivy as a party, and, in February, 1997, resubmitted it to Defonseca for her signature, intentionally failing to inform her that Mt. Ivy had been added as a signatory, and thus would be entitled to a portion of the French rights, in violation of the original publishing agreement signed by Defonseca and Mt. Ivy. Instead, Missakian falsely represented to Defonseca that "the originals ... were somehow lost en route to France," and that Defonseca had to sign the French agreement again.¹³ After falsely obtaining Defonseca's signature on the Second French Agreement, Daniel then intimidated and threatened Lee, obtaining her signature also.¹⁴

In May, 1997, frustrated with the loss of authorship credit on the cover of the book as well as the escalating situation with Daniel, Lee sent demand letters threatening legal action to both Defonseca and Daniel. Defonseca urged Daniel to resolve the problem by putting Lee's name on all reprints. After Daniel refused, Defonseca notified Daniel that, should Lee sue her, Defonseca would seek indemnification from Mt. Ivy for any associated costs.

In August, 1997, shortly after receiving Defonseca's demand for indemnification, Daniel created an offshore subsidiary corporation called Mt. Ivy Press International, Ltd. (Mt. Ivy International). Concurrently, for consideration of one dollar, she executed an assignment to Mt. Ivy International of all Mt. Ivy Press, L.P.'s "right, title, and interest to publication of the [Work] outside the United States and Canada." The trial judge found that the actual purpose of creating Mt. Ivy International was to transfer all foreign rights to the book to the offshore company, and to avoid paying Defonseca and Lee royalties on the foreign publication of the book.¹⁵ She further found that all of the money paid to Mt. Ivy International was eventually funneled to Daniel.

In May, 1998, Lee filed suit in Superior Court against Mt. Ivy, Daniel, and Defonseca, alleging breach of contract, interference with contractual relations, fraud, violation of G.L. c. 93A, quantum meruit, and unjust enrichment, and seeking to pierce the corporate veil and to hold Jane...