Music Mix Mobile, LLC v. Newman (In re Stage Presence Inc.)
| Citation | 555 B.R. 166 |
| Decision Date | 19 July 2016 |
| Docket Number | Adv. Pro. No. 15–01392 MEW,Case No. 12–10525 MEW |
| Parties | In re: Stage Presence Incorporated, Debtor. Music Mix Mobile, LLC, Jeff Shaw Productions, Inc., One Foot Productions, LLC, V.I.P. Prompting Corporation, Idea Asylum Productions, Inc., Kenigma, Inc., East Shore Sound, Inc., Weusi Baraka Chapman, Lloyd Jordan and George M. Bera, Plaintiffs, v. Allen Newman, Matthew Weiner, Stage Presence, Inc., One for Each Island Ltd., Gregory Marquette and “XYZ Corp.”, being the fictitious name of one or more entities, Defendants. |
| Court | United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York |
THE LAW OFFICE OF KERRY E. CONNOLLY, ESQ., New York, New York, Counsel for the Plaintiffs, By: Kerry E. Connolly, Esq.
SHAFFERMAN & FELDMAN LLP., New York, New York, Counsel for Debtor, By: Joel Shafferman, Esq.
ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK P.C., New York, New York, Counsel for Matthew Weiner, By: Robert M. Sasloff, Esq., John D. D'Ercole, Esq.
THE LAW OFFICE OF JOHN CARLSON, Merrick, New York, Counsel for Allen Newman, By: John Carlson, Esq.
Before the Court is the motion to dismiss filed by Debtor Stage Presence Incorporated and by individual defendants Allen Newman and Matthew Weiner. For the reasons set forth below the Court will dismiss some claims but will allow others to proceed.
This case arises out of a televised program that was held in May 2010 to benefit a charity named Childhelp. Plaintiffs allege that they were not paid for the audio, editing, teleprompter, music mixing and other services they provided in connection with the program. The defendants include Stage Presence Incorporated (the chapter 11 debtor), another entity named One for Each Island Ltd. (“OFEI ”) and the three individual producers of the benefit program: Allen Newman, Matthew Weiner and Gregory Marquette. Complaint ¶¶ 11–26.1
Plaintiffs allege that OFEI may never have actually existed, but that in early 2010 OFEI entered into a contract with Childhelp under which OFEI agreed to “provide the services” of Marquette, Newman and Weiner “as Producers” for the benefit program. Weiner signed the agreement on behalf of OFEI and listed his title as “Producer.” OFEI also entered into a letter agreement with BET Event Productions LLC that outlined terms for the production and telecast of the benefit program. The letter agreement was on the letterhead of BET and was addressed to Newman and Weiner “c/o One From Each Island, Ltd.” Weiner signed the letter agreement on behalf of OFEI, again listing his title as “Producer.” Id. ¶¶ 34–36, 43–45 and Exhibits 17, 20.
Newman owns substantially all (if not all) of the equity in Stage Presence. How and why Stage Presence got involved in the production arrangements is not clear. Plaintiffs allege that Stage Presence hired Plaintiffs to provide services in connection with the benefit program. Id. ¶¶ 17–26. Stage Presence does not dispute that it has contractual liabilities to some or all of the Plaintiffs, though the details and amounts are yet to be decided.
Plaintiffs have asserted three separate theories of contract liability against OFEI, Newman, Weiner and Marquette. The first theory is that Newman, Marquette, Weiner, OFEI and Stage Presence are jointly liable for the contract liabilities of Stage Presence on a “partnership by estoppel” theory. The second theory is that Plaintiffs are third party beneficiaries of certain provisions in the Childhelp contract and the BET letter agreement. The third theory is that OFEI, Newman, Weiner and Marquette should jointly share in the contract liabilities of Stage Presence on “alter ego” grounds.
Plaintiffs also accuse Newman and Weiner of fraud, and accuse Weiner of aiding and abetting fraud. They further contend that Newman was unjustly enriched and breached fiduciary duties when Newman caused post-bankruptcy business opportunities to be pursued by other companies that Newman controlled instead of being pursued by Stage Presence. Finally, two individual Plaintiffs (Weuis Baraka Chapman and Lloyd Jordan) allege that Stage Presence, Newman and Weiner were statutory “employers” with liability for wages that are owed to them. Plaintiffs have abandoned a separate claim alleging tortious interference with contract.
Newman, Weiner and Stage Presence have moved to dismiss. There is no affidavit of service on file with respect to OFEI and Marquette, and the certificate of service of the revised amended complaint indicates that Stage Presence, Newman and Weiner were the only defendants who were served with that pleading. See Docket No. 23. Plaintiffs' counsel confirmed on July 14 that she has not yet made efforts to complete service on OFEI. Counsel informed the Court that Marquette may have received a discharge in a personal bankruptcy case.
Plaintiffs, Stage Presence, Newman and Weiner agree that this Court has “core” jurisdiction over claims against Stage Presence. 28 U.S.C. § 157(c)(2)
. They do not agree as to whether other claims raise “core” issues, but they agree that the claims are at least “related to” the pending bankruptcy case, and they have consented to a final determination of the claims by this Court. See Docket Nos. 39, 40, 41, 43. These consents are sufficient as a statutory and constitutional matter to permit this Court to render a final decision. 28 U.S.C. § 157(c)(2) ; Wellness International Net work, Ltd., et al. v. Sharif, 575 U.S. ––––, 135 S.Ct. 1932, 191 L.Ed.2d 911 (2015)
.
, which incorporates Federal Rule of Civil Procedure 12(b)(6), permits a bankruptcy court to dismiss an adversary proceeding if a complaint fails to state a claim upon which relief may be granted. See Fed. R. Bankr. P. 7012(b). In reviewing a motion to dismiss the court accepts the factual allegations of the complaint as true and draws all reasonable inferences in the plaintiffs' favor. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; E.E.O.C. v. Staten Island Sav. Bank, 207 F.3d 144, 148 (2d Cir.2000). However, the factual allegations in a complaint must be supported by more than mere conclusory statements. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. The allegations must be sufficient “to raise a right to relief above the speculative level” and provide more than a “formulaic recitation of the elements of a cause of action.” Id. (citations omitted). “[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ).
(citations and internal quotation marks omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct,” a complaint is insufficient under Fed.R.Civ.P. 8(a) because it has merely “alleged” but not “show[n] ... that the pleader is entitled to relief.” Id. at 679, 129 S.Ct. 1937 ; see also
id. at 682, 129 S.Ct. 1937 () (internal quotation marks and citation omitted).
Rule 7009, which incorporates Rule 9(b) of the Federal Rules of Civil Procedure
, imposes added requirements as to Plaintiffs' fraud claims. “[I]n order to comply with Rule 9(b), ‘the complaint must: (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.’ ” Lerner v. Fleet Bank, N.A., 459 F.3d 273, 290 (2d Cir.2006) (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir.1993) ). While “the fraud alleged must be stated with particularity ... the requisite intent of the alleged [perpetrator] of the fraud need not be alleged with great specificity.” Chill v. Gen. Elec. Co., 101 F.3d 263, 267 (2d Cir.1996) (citations omitted); see also Fed.R.Civ.P. 9(b) (). Nevertheless, a plaintiff “ ‘must allege facts that give rise to a strong inference of fraudulent intent.’ ” Lerner, 459 F.3d at 290 (quoting Acito v. IMCERA Grp., Inc., 47 F.3d 47, 52 (2d Cir.1995) ).
The parties have addressed the claims on the presumption that all of them are governed by New York law. Stage Presence is a New York corporation, so it is reasonable to apply New York law in assessing the “alter ego” claims. Plaintiffs allege that Chapman and Jordan were New York residents who were hired in New York, so there is reasonable support for the alleged applicability of the New York Labor Law to their claims to recover wages. Newman allegedly diverted corporate opportunities belonging to a New York corporation, so if Plaintiffs were able to pursue such claims they would be governed by New York law. It is not so clear, however, just why New York law would govern the other asserted claims.
As to the alleged contracts between Plaintiffs and Stage Presence: Stage Presence is a New York corporation with a New York office. However, only five of the ten named Plaintiffs are located in New York. Complaint ¶¶ 12, 17–26. The charity event for which Plaintiffs provided services was held in Washington, DC. Plaintiffs allege that they were hired by Mr....
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