Torah Soft Ltd. v. Drosnin

• Decision Date: 16 September 2002
• Docket Number: No. 00 CIV. 0676(JCF).,00 CIV. 0676(JCF).
• Citation: 224 F.Supp.2d 704
• Parties: TORAH SOFT LTD., Plaintiff, v. Michael DROSNIN, Defendant.
• Court: U.S. District Court — Southern District of New York

224 F.Supp.2d 704

TORAH SOFT LTD., Plaintiff, v. Michael DROSNIN, Defendant.

No. 00 CIV. 0676(JCF).

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

September 16, 2002.

Howard I. Rhine, Feder, Kaszovitz, Isaacson, Weber, Skala & Bass, LLP, New York City, for plaintiff.

Marcia B. Paul, William H. Crosby, Jr., Kay & Boose, LLP, New York City, Kenneth D. Burrows, New York City, for defendant.

MEMORANDUM OPINION AND ORDER

FRANCIS, United States Magistrate Judge.

The defendant in this action, Michael Drosnin, is the author of the bestselling book The Bible Code, in which he purports to have discovered prophesies of future events embedded within the text of the Hebrew Bible. The plaintiff, Torah Soft Ltd. ("Torah Soft"), is a corporate entity whose principal shareholder and sole officer, Dr. Yochanon Spielberg, created computer software that Mr. Drosnin used in connection with the creation of his book. The plaintiff contends that Mr. Drosnin breached agreements to provide publicity for Torah Soft and to give the plaintiff the opportunity to market its software with the book. Mr. Drosnin has filed counter-claims against Torah Soft and third-party claims against Dr. Spielberg asserting that they committed breach of contract by offering for sale to the public the software that had been modified for his exclusive use. Mr. Drosnin further alleges that Torah Soft and Dr. Spielberg engaged in unfair competition by falsely representing that he had used Torah Soft's computer program to write his book.

The parties consented to proceed before me for all purposes pursuant to 28 U.S.C. § 636(c). Mr. Drosnin has now moved under Rule 56 of the Federal Rules of Civil Procedure for summary judgment dismissing the complaint. Torah Soft and Dr. Spielberg have cross-moved for summary judgment on the counterclaims and third-party claims and have also moved for sanctions pursuant to 28 U.S.C. § 1927 on the ground that Mr. Drosnin's counsel acted in bad faith by failing to withdraw three of the counterclaims and third-party claims until confronted with Torah Soft's summary judgment motion.

For the reasons that follow, Mr. Drosnin's summary judgment motion is granted in part and denied in part, and Torah Soft's motions for summary judgment and for sanctions are denied.

Background

According to Bible code theory, the Hebrew Bible contains predictions of the future encrypted in its text. The first step in breaking the code is to identify letters, each equidistant from the next (equidistant letter skips or "ELS's"), that form a word or phrase. For example, in The Bible Code, Mr. Drosnin contends that the name "Yitzhak Rabin" appears once in the Bible, with each letter separated by 4,772 others. The relevant ELS is therefore 4,722. Next, the text of the Bible is rearranged into columns of letters, each the length of the chosen ELS. In the example, columns of letters 4,772 units high form a matrix. That matrix can then be examined to determine whether any recognizable phrase crosses the word at issue, implying a prophesy. In this instance, the name "Yitzhak Rabin" is intersected by the words "assassin will assassinate," a "prediction" that proved accurate.

According to Dr. Spielberg, he first developed a computer program for conducting Bible code searches (the "Software") in 1988. (Declaration of Yochanan Spielberg dated March 25, 2002 ("Spielberg 3/25/02 Decl."), ¶ 4). On August 17, 1992, he was contacted by Mr. Drosnin who had purchased a copy of the Software and was interested in using it in connection with a book he intended to write about the Bible code. (Spielberg 3/25/02 Decl., ¶¶ 8-10). In order for the Software to be most useful to Mr. Drosnin, certain modifications were required, and Dr. Spielberg alleges that he agreed to perform the necessary programming services in return for compensation at the rate of $20 per hour and the promise of publicity in connection with the book. (Spielberg 3/25/02 Decl., ¶¶ 10, 12, 14). Dr. Spielberg contends that $20 per hour was far below the market value for his services and that he agreed to it only because of the accompanying promise of publicity. (Spielberg 3/25/02 Decl., ¶¶ 14, 15, 51). On the same day that this conversation took place, Mr. Drosnin sent Dr. Spielberg a facsimile outlining the requested modifications to the Software and stating, "I think that the work I'm doing will eventually lead to a lot of publicity for your company, and I'll appreciate any assistance you can give me." (Affirmation of Howard I. Rhine dated March 26, 2002 ("Rhine 3/26/02 Aff."), Exh. 1).

Dr. Spielberg claims that in September 1992 he spoke with Mr. Drosnin about the nature of the publicity that Torah Soft would receive. When he asked whether Torah Soft would be mentioned by name in the book, Mr. Drosnin replied that it would. (Spielberg 3/25/02 Decl., ¶ 17). Dr. Spielberg also asked if the book would include Torah Soft's fax number and e-mail address, and Mr. Drosnin answered, "Yes." (Spielberg 3/25/02 Decl., ¶ 18). According to Dr. Spielberg, on at least fifteen occasions when Mr. Drosnin requested additional programming services, he reiterated that Torah Soft would receive substantial publicity and "make a lot of sales" as a result of publication of the book. (Spielberg 3/25/02 Decl., ¶ 20).

Similarly, in March 1995, Mr. Drosnin requested modifications to the Software that required the use of a utility program known as a "debugger." When Dr. Spielberg told him that the debugger would cost a few hundred dollars, Mr. Drosnin purportedly said, "You're going to make a lot of software sales when my book comes out, so I do not want to pay 100% of the cost of the debugger. Let's split it." Dr. Spielberg then purchased the debugger on that basis. (Spielberg 3/25/02 Decl., ¶¶ 29, 30, 31).

According to Dr. Spielberg, Mr. Drosnin not only promised him publicity, but also raised the possibility of marketing the Software together with the book. In September 1994, Mr. Drosnin suggested several possibilities: a disk with the Software could be included with each copy of the book, the book and the Software could be marketed simultaneously by the same publisher, or marketing could be coordinated between the book's publishers and a software distributer. In addition, if the Software were not sold jointly with the book, an advertising insert could be included in the book. (Spielberg 3/25/02 Decl. ¶¶ 59, 60). In December 1995, Mr. Drosnin promised Dr. Spielberg that if he were to market any software with the book, it would be Torah Soft's product. (Spielberg 3/25/02 Decl., ¶¶ 63, 64, 65).

The Bible Code was ultimately published in 1997. It included no reference to Torah Soft or Dr. Spielberg, but credited Dr. Eliyahu Rips, an Israeli mathematician, with "discovery" of the Bible code. (Affidavit of William H. Crosby, Jr. dated March 25, 2002 ("Crosby 3/25/02 Aff."), Exh. F, at 13-14). No software was marketed with the book.

In addition to contesting many of the plaintiff's allegations, Mr. Drosnin asserts that when he engaged Dr. Spielberg to modify the Software, they agreed that the enhanced version would be for Mr. Drosnin's exclusive use and would not be sold or distributed to others. (Affidavit of Michael Drosnin dated March 22, 2002 ("Drosnin 3/22/02 Aff."), ¶ 4). According to Mr. Drosnin, Dr. Spielberg acknowledged this agreement by including in the opening screen of the Software the legend: "For use of Michael Drosnin Only!" (Drosnin 3/22/02 Aff., ¶ 4). However, subsequent to publication of The Bible Code, Dr. Spielberg sold copies of the modified Software to the public.

In connection with those sales, Torah Soft placed an advertisement on its web-site in 1998 that included the catchphrase: "Now use the same program that Michael Drosnin used to write The Bible Code." (Drosnin 3/22/02 Aff., ¶ 5). Mr. Drosnin contends, however, that he relied on Dr. Rips' computer program to write the book and only used Torah Soft's Software to do preliminary research and to print out the matricies that were used in the book to illustrate the Bible code "finds." (Drosnin 3/22/02 Aff., ¶ 5).

Torah Soft first filed a complaint against Mr. Drosnin and his publisher, Simon and Schuster, Inc., in 1998 in New York State Supreme Court. (Affidavit of William H. Crosby, Jr. dated Jan. 31, 2002 ("Crosby 1/31/02 Aff."), attached to Notice of Motion, Exh. A). The claims against Simon and Schuster were dismissed by stipulation (Crosby 1/31/02 Aff., Exh. B), and Torah Soft subsequently filed its First Amended Complaint. (Crosby 1/31/02 Aff., Exh. C). That pleading alleged four claims against Mr. Drosnin: breach of contract, breach of fiduciary duty, quantum meruit, and unjust enrichment. (Crosby 1/31/02 Aff., Exh. C).

In the meantime, Mr. Drosnin had filed an answer with cross-claims against Torah Soft and parallel third-party claims against Dr. Spielberg. The First Counterclaim¹ charges that Torah Soft breached an agreement with Mr. Drosnin to maintain the modified Software for his exclusive use by marketing that Software to the public. (Affirmation of Howard I. Rhine dated Jan. 31, 2002 ("Rhine 1/31/02 Aff."), attached to Notice of Motion for Summary Judgement, Exh. 1 ("Answer"), ¶¶ 83-100). The Second and Third Counterclaims allege false advertising and deceptive trade practices, respectively, in violation of New York General Business Law, on the ground that Dr. Spielberg sold the Software with the false representation that it had been used by Mr. Drosnin to write The Bible Code. (Answer, ¶¶ 101-106). The Fourth Counterclaim asserts that by using Mr. Drosnin's name to market the Software without his permission, Dr. Spielberg and Torah Soft violated New York Civil Rights Law § 51. (Answer, ¶¶ 107-110). Finally, the Fifth Counterclaim raises a common law claim of unfair competition, again based on the representation that the Software was used to write the book. (Answer ¶¶ 111-114).

Mr. Drosnin then moved to dismiss the First Amended...