Mirage Entm't, Inc. v. FEG Entretenimientos S.A., 18cv581

• Decision Date: 29 August 2018
• Docket Number: 18cv581
• Parties: MIRAGE ENTERTAINMENT, INC., Plaintiff, v. FEG ENTRETENIMIENTOS S.A., et al., Defendants.
• Court: U.S. District Court — Southern District of New York

326 F.Supp.3d 26

MIRAGE ENTERTAINMENT, INC., Plaintiff,

v.FEG ENTRETENIMIENTOS S.A., et al., Defendants.

18cv581

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

Signed August 29, 2018

Carla M. Wirtschafter, Reed Smith LLP, Los Angeles, CA, Jordan W. Siev, Reed Smith LLP, New York, NY, for Plaintiff.

Robert Edward Allen, Kathryn Lee Boyd, Mason Storm Byrd, Pro Hac Vice, McKool Smith Hennigan P.C., Robert Edward Allen, Gradstein & Marzano, P.C., Los Angeles, CA, for Defendants.

OPINION & ORDER

WILLIAM H. PAULEY III, Senior United States District Judge:

Mirage Entertainment, Inc. ("Mirage") and Mariah Carey ("Carey," and with Mirage, "Counterclaim Defendants") move to dismiss counterclaims asserted by FEG Entretenimientos S.A. ("FEG Argentina") and FEG S.A. ("FEG Chile," and with FEG Argentina, "Counterclaimants") in this breach of contract action. Counterclaimants assert that Counterclaim Defendants breached three contracts between the parties by unilaterally cancelling two South American concerts without affording Counterclaimants an opportunity to cure. Counterclaimants also allege that a 2016 tweet (the "Tweet") that Carey posted to her Twitter account was defamatory. For the reasons that follow, Counterclaim Defendants' motion to dismiss is granted in part and denied in part.

BACKGROUND

The allegations in the Counterclaims are accepted as true on this motion. Counterclaimants are South American concert promoters. (Countercls. for Breach of Contract & Defamation, ECF No. 14 ("Counterclaims") ¶¶ 4–5, 10.) Mirage operates as Carey's "loan out corporation."¹ (Counterclaims ¶¶ 6, 11.) In essence, Mirage contracts with others for Carey's live performances. (Counterclaims ¶ 11.) Non-party United Talent Agency ("UTA") coordinates transactions between artists and concert promoters. (Counterclaims ¶ 11.)

In June 2016, FEG Argentina and Mirage contracted for Carey to perform in Buenos Aires, Argentina on October 28, 2016 (the "Argentina Agreement"). (Counterclaims ¶¶ 15–17.) FEG Argentina agreed to pay Mirage a fee of $575,000 in installments. (Counterclaims ¶¶ 17–18.) FEG Argentina executed the Argentina Agreement and delivered it to UTA in late September 2016. (Counterclaims ¶ 18.) FEG Chile and Mirage also contracted for Carey to perform in Santiago, Chile on October 30, 2016 (the "Chile Agreements," and with the Argentina Agreement, the "Agreements"). (Counterclaims ¶¶ 20–22.) In two separate contracts, FEG Chile agreed to pay Carey a fee of $425,000 and a net payment of $175,000 for airfare and travel. (Counterclaims ¶¶ 20, 22.) Like the Argentina Agreement, the Chile Agreements set schedules for installment payments. (Counterclaims ¶¶ 23–24.) FEG Chile executed the Chile Agreements and delivered them to UTA in late September 2016. (Counterclaims ¶ 23.)

Under the Agreements, Carey had the right to cancel her performances if Counterclaimants failed to make timely installment payments. (Counterclaims ¶ 25.) But each contract provided a notice and cure provision: if Counterclaim Defendants believed that Counterclaimants were in breach, they agreed to provide written notification of the reasons for such breach and afford forty-eight hours to cure. (Counterclaims ¶ 26.)

Counterclaimants' payments were due in full by either September 8, 2016 or September 15, 2016. (See Decl. of Jordan W. Siev in Supp. of Counter-Defs.' Mot. to Dismiss, ECF No. 38 ("Siev Decl."), Exs. 1, 3.)² Counterclaimants failed to make payments according to the installment schedules. As of October 25, 2016, they had "wired a total of $703,100 to UTA ... nearly 75% of all funds due." (Counterclaims ¶ 27.) In fact, Counterclaimants made late and/or deficient payments throughout late 2016 and never received objection from Counterclaim Defendants. (Counterclaims ¶¶ 30–32.) Counterclaimants allege that this was consistent with their business custom—installment schedules were rarely followed but "artists were always paid in full." (Counterclaims ¶ 12.)

On October 25, 2018, three days before the Argentina concert, Counterclaimants learned through media reports that Carey had cancelled the Argentina and Chile performances. (Counterclaims ¶¶ 36–37.) That evening, Carey tweeted "Devastated my shows in Chile, Argentina & Brazil³ had to be cancelled. My fans deserve better than how some of these promoters treated them." (Counterclaims ¶ 41.) The Tweet linked to an E! News tweet, which in turn linked to an E! News article titled "Mariah Carey Cancels Part of her Latin America Tour Citing Promoter Negligence." (Counterclaims ¶ 42.) In that article, E! News reported that Carey had been forced to cancel the South American leg of her tour due to "promoter negligence." Mike Vulpo, Mariah Carey Cancels Part of Her Latin America Tour Citing Promoter Negligence, E! News (Jan. 10, 2017), https://www.eonline.com/news/804645/mariah-carey-cancels-part-of-her-latin-america-tour-citing-promoter-negligence. On October 26, 2016, Carey's production manager confirmed cancellation of the performances by email and UTA then returned more than $600,000 to Counterclaimants. (Counterclaims ¶¶ 38–39.)

In January 2017, Mirage sued Counterclaimants in California state court, asserting breach of contract. (See Decl. of Robert E. Allen in Supp. of Defs.' Notice of Removal of Action Under 28 U.S.C. § 1441(a), ECF No. 1-1, Ex. A ("Original Compl."); Ex. D, at 6–7.) In December 2017, Counterclaimants removed the action to the United States District Court for the Central District of California. (Defs.' Notice of Removal of Action Under 28 U.S.C. § 1441(a), ECF No. 1, at 1–2.) In January 2018, Counterclaimants filed an unopposed motion to transfer to this district. (Defs.' Notice of Mot. and Unopposed Mot. to Transfer Venue, ECF No. 12, at 1–2.) While that motion was pending, Counterclaimants answered and asserted these counterclaims. Although the original claims were brought solely by Mirage, Counterclaimants added Carey as a counterclaim defendant. The Central District of California subsequently granted Counterclaimants' transfer motion. (See Order Granting Defs.' Mot. to Transfer Venue to the Southern District of New York, ECF No. 16.)

In their motion to dismiss, Counterclaim Defendants contend that emails sent by UTA to Counterclaimants demonstrate that Counterclaimants were provided notice of breach and an opportunity to cure, meaning that Counterclaim Defendants did not unilaterally breach the Agreements. They also contend that Carey is an improper defendant for the breach of contract counterclaims. Finally, Counterclaim Defendants contend that the defamation counterclaim should be dismissed.

LEGAL STANDARD

"To avoid dismissal, a complaint must plead ‘enough facts to state a claim to relief that is plausible on its face.’ " Hardaway v. Hartford Public Works Dep't, 879 F.3d 486, 489 (2d Cir. 2018) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A claim is facially plausible ‘when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ " Tannerite Sports, LLC v. NBCUniv. News Grp., a Division of NBCUniv. Media, LLC, 864 F.3d 236, 247 (2d Cir. 2017) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). A court "accept[s] the complaint's factual allegations as true and draw[s] all reasonable inferences in the plaintiff's favor." Carpenters Pension Tr. Fund of St. Louis v. Barclays PLC, 750 F.3d 227, 232 (2d Cir. 2014) (citation omitted).

A "complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference." Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002) (citation and quotation marks omitted). "Even where a document is not incorporated by reference, the court may nevertheless consider it where the complaint ‘relies heavily upon its terms and effect,’ which renders the document ‘integral’ to the complaint." Chambers, 282 F.3d at 153 (citing Int'l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995) (per curiam) ).

DISCUSSION

I. Breach of Contract

A. Emails Attached to Counterclaim Defendants' Motion

In moving to dismiss the breach of contract counterclaims, Counterclaim Defendants attach six email chains to their motion. (See Siev Decl. Exs. 4–9.) They contend that these emails demonstrate that Counterclaimants were provided notice and an opportunity to cure their deficient payments. Further, they assert that this Court may take judicial notice of these emails as matters integral to the pleading even though they were not attached or incorporated into the Counterclaims.

When a document is not attached to a pleading or incorporated by reference, a court may nevertheless consider it when "integral to the [pleading]," I. Meyer Pincus & Assocs., P.C. v. Oppenheimer & Co., 936 F.2d 759, 762 (2d Cir. 1991), such that the pleading "relies heavily upon its terms and effect," Int'l Audiotext, 62 F.3d at 72. The Second Circuit has held that this standard "has been misinterpreted on occasion" and has therefore clarified that "a plaintiff's reliance on the terms and effect of a document in drafting the complaint is a necessary prerequisite to the court's consideration of the document on a dismissal motion; mere notice or possession is not enough." Chambers, 282 F.3d at 153 (emphasis original). This reliance standard is strictly enforced because "[c]onsideration of extraneous material in judging the sufficiency of a complaint is at odds with the liberal pleading standard." Chambers, 282 F.3d at 154 ; see also In re Lyondell Chem. Co., 491 B.R. 41, 50 n.48 (Bankr. S.D.N.Y. 2013) (recognizing that in Chambers, the Second Circuit "cut back on [its] earlier, broader, pronouncements" regarding this standard).

The Counterclaims do not explicitly reference the emails attached to Counterclaim Defendants' motion to dismiss....