Art Capital Group, LLC v Getty Images, Inc.

[*1] Art Capital Group, LLC v Getty Images, Inc. 2009 NY Slip Op 51909(U) [24 Misc 3d 1247(A)] Decided on July 30, 2009 Supreme Court, New York County Goodman, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 30, 2009
Supreme Court, New York County

Art Capital Group, LLC and ART CAPITAL GROUP, INC., Plaintiffs,

against

Getty Images, Inc. and GETTY IMAGES (U.S.) INC., Defendants.



601136/09

Emily Jane Goodman, J.

Motion sequence numbers 001 and 002 are consolidated for disposition.

This dispute arises out of a proposed sale of the photographic archive of the world-renowned photographer Annie Leibovitz (Leibovitz). Plaintiffs Art Capital Group, LLC (ACG) and Art Capital Group, Inc. (ACGI), Leibovitz's exclusive agent for the sale, allege that defendants Getty Images, Inc. (Getty) and Getty Images (U.S.), Inc. (Getty U.S.) breached a confidentiality agreement relating to the proposed transaction, and then used that information to structure a deal with Leibovitz.

In motion sequence number 001, plaintiffs move, by order to show cause, for a temporary restraining order and preliminary injunction enjoining: (1) defendants from breaching a confidentiality agreement dated March 5, 2009 by using confidential information to negotiate directly or indirectly with Leibovitz or persons acting on her behalf, concerning her photographic services and/or a potential sale of her complete photographic archive; (2) defendants, and anyone acting on their behalf, from performing or accepting performance under an agreement dated March 17, 2009 between Getty U.S. and Leibovitz, and any other agreement between defendants and any affiliates, and Leibovitz or persons or entities acting on her behalf; and (3) defendants from otherwise using the confidential information or providing it to anyone not entitled to receive it under the confidentiality agreement. Plaintiffs also request that the court records in this action be sealed pursuant to 22 NYCRR 216.1.

In motion sequence number 002, defendants move, pursuant to CPLR 3211 (a) (7), for an order dismissing each cause of action for failure to state a cause of action.

FACTUAL ALLEGATIONS

Plaintiffs provide financial and consulting services to artists and art owners. Among other services, plaintiffs offer asset-based loans to artists, individuals, and art galleries, using intellectual property rights and art assets as the collateral securing the loan. Defendants are among a handful of elite companies that acquire photographic archives and associated [*2]intellectual property rights. Specifically, defendants license the intellectual property rights of the photographs for reproduction.

Plaintiffs allege that, on September 8, 2008, plaintiffs' affiliate, American Photography, LLC, and ACGI's predecessor in interest, Fine Art Finance, LLC, entered into a secured loan agreement (the Loan Agreement) with Leibovitz and certain entities controlled by her, to wit, Leibovitz Studio, Inc., 305-307 West 11th Street, LLC, 311 West 11th Street, LLC (hereinafter, the Leibovitz entities). ACGI succeeded Fine Art Finance, LLC as "arranger" under the Loan Agreement.

On December 17, 2008, ACGI entered into a sales agreement (the Sales Agreement) with Leibovitz and the Leibovitz entities in exchange for giving Leibovitz additional loans. According to plaintiffs, pursuant to the Sales Agreement, Leibovitz and the Leibovitz entities authorized ACGI to act as their exclusive agent for: (i) the sale of fine art and intellectual property previously created by them; and (ii) any newly-created work by them until two years after the date on which all of their obligations under the Loan Agreement are satisfied, i.e., the Tail Period. Specifically, the Sales Agreement provides that:

Borrower hereby irrevocably authorizes the Arranger [ACGI] to proceed during the Term and the Tail Period (as such terms are defined in the Loan Agreement), as Borrower's exclusive agent, in identifying buyers of the Fine Art Collateral . . . and soliciting offers to purchase the same. The Arranger [ACGI] is hereby authorized to consummate such sales on behalf of Borrower provided that the aggregate gross sales price of the Fine Art Collateral (prior to selling expenses and commissions) is at least the lesser of $ . . . or the appraised value thereof. With respect to such sales, the Arranger [ACGI] shall be entitled to (i) a . . . % sales commission on the gross sales price of such sales of Fine Art Collateral.

(Complaint, ¶ 16, Exh. 4 [Sales Agreement, ¶ 1]).

In January 2009, plaintiffs identified potential candidates for the sale of Leibovitz's photographic archive. On January 29, 2009, ACG's managing director, Baird Ryan, contacted Getty's senior archive editor, Rene Aranzamendez, to inquire whether defendants would be interested in pursuing a potential transaction in which ACGI was acting as the exclusive agent. After Getty expressed interest in the transaction, on February 4, 2009, ACG and Getty executed a confidentiality agreement, in which Getty agreed, among other things:

(i) to keep all Confidential Information confidential, (ii) to use the Confidential Information solely for purposes of evaluating the Transaction and (iii) not to disclose the Confidential Information to any person other than those of the Receiving Party's Representatives who need to know such Confidential Information solely for the purposes of evaluating the Transaction.

(Complaint, ¶ 23, Exh. 3 [February 2, 2009 Confidentiality Agreement, ¶ 1]). "Confidential Information" was defined as "all information or data made available to the Receiving Party [Getty] concerning or relating to (i) the Transaction, (ii) the Disclosing Party . . . or (iii) the fact that such information has been made available to the Receiving Party or that discussions, preparations or negotiations are taking place concerning the Transaction." (id.). ACG did not disclose the nature of the transaction or the name of the artist.

The next day, Ryan informed Aranzamendez that ACGI was acting as the exclusive agent [*3]for Leibovitz and the Leibovitz entities, and that Leibovitz's entire photographic archive was available for purchase, in addition to Leibovitz's services to augment the archive. According to plaintiffs, Ryan informed Aranzamendez that ACGI was also acting as the exclusive agent for Leibovitz and the Leibovitz entities for any newly created work for a two-year period until all of the obligations under the Loan Agreement are satisfied, which was likely to be through 2011.

After Getty expressed further interest in the transaction, Aranzamendez introduced Ryan to Matthew Butson, Getty's vice president, and Getty's chief executive officer, Jonathan Klein. Plaintiffs allege that they provided substantial confidential information to defendants thereafter. For instance, on February 22, 2009, ACG provided figures concerning the number of shots, exposures, rolls of film and published works in the archive. ACG also provided confidential information concerning Leibovitz's copyrights in her work and her relationship with Conde Nast Publications. ACG informed Butson that some of Leibovitz's vintage material with Rolling Stone magazine was "without restriction," which allegedly had an appraised value in excess of $50 million. On February 24, 2009, ACG provided a complete shoot list of Leibovitz's work, including the subjects, dates, and locations of her shoots. ACG also suggested that Leibovitz do eight photo shoots for Getty over a two-year period.

Given the progression of discussions, ACG sent a revised confidentiality agreement to Getty. On March 5, 2009, ACG entered into the agreement (the March 5, 2009 Confidentiality Agreement) with Getty. The March 5, 2009 Confidentiality Agreement defined Getty's confidentiality obligations and "Confidential Information" in the same manner as the prior agreement.[FN1]

The following week, Klein, Getty's CEO, offered $15 million to plaintiffs for Leibovitz's archive. Plaintiffs allege that this was a "low-ball bid," intentionally made to chill discussions with plaintiffs after defendants spoke directly with Leibovitz. On March 11, 2009, Klein inquired whether plaintiffs had received defendants' offer, and also stated that he understood that plaintiffs were demanding $1 million from Leibovitz that week. According to plaintiffs, ACG only responded that it was not encouraged by defendants' value bracket of $15 million. Plaintiffs allege that, at that point, conversations with defendants abruptly ceased.

Plaintiffs then commenced discussions with another candidate that they had previously identified for the sale. On March 19, 2009, the candidate contacted plaintiffs and informed them that Getty had issued a press release announcing that it had just announced a deal with Leibovitz. The press release stated that:

Orchard Represents by Getty Images announced today a special multi-assignment collaboration with the internationally renowned photographer Annie Leibovitz. Leibovitz's distinctive approach and signature style has led her to become one of the world's most prolific photographers of our generation. The addition of Leibovitz's name and talen[t] to Orchard Represents further enhances Getty Images' trademark offering of the world's best photography and roster of elite photographers available for commission photography. [*4]

"Getty Images has quietly become one of the leading agencies in the world. I look forward to working with Jonathan Klein and his team," said Annie Leibovitz.

"Annie Leibovitz stands above all in so many genres of photography," said Jonathan Klein, co-founder and [chief] executive officer of Getty Images. "We are honored to represent her iconic photography and we are looking forward to a successful partnership."

Plaintiffs allege that defendants used the confidential information about the archive and Leibovitz's other commitments to directly negotiate with Leibovitz and enter into a services agreement with her (the Services Agreement). In the Services Agreement, Leibovitz agreed to perform eight assignments for defendants in exchange for a $1.1 million fee. Plaintiffs assert that the Services Agreement provides that Getty would not ask Leibovitz to do any projects for any "U.S., foreign, or online magazine, newspaper or periodical publication," in recognition of restrictions in the Conde Nast agreement. Plaintiffs also allege that other provisions of the Conde Nast agreement were directly copied into the Services Agreement. They allege that Getty used verbatim the two-year, eight-shoot collaboration with Leibovitz that ACG had proposed. Plaintiffs claim that, as a result of defendants' actions, the Services Agreement has impaired the collateral under the Loan Agreement and their exclusive agency for Leibovitz's archive and services. According to plaintiffs, the prospective candidate asked plaintiffs for clarity concerning the Services Agreement, and has advised that it is not interested in the transaction.

The complaint asserts four causes of action: (1) breach of contract; (2) fraud; (3) tortious interference with contractual relations; and (4) tortious interference with prospective business advantage. The court denied plaintiffs' request for a temporary restraining order.

DISCUSSION

A.Defendants' Motion to Dismiss

On a motion to dismiss pursuant to CPLR 3211 (a) (7), the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 NY2d 83, 87-88 [1994]; see also DeMicco Bros., Inc. v Consolidated Edison Co. of NY, Inc., 8 AD3d 99 [1st Dept 2004]). However, "bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted by documentary evidence, are not presumed to be true and accorded every favorable inference" (Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81 [1st Dept 1999], affd 94 NY2d 659 [2000] [internal quotation marks omitted]). Where extrinsic evidence is submitted in connection with the motion, the appropriate standard of review "is whether the proponent of the pleading has a cause of action, not whether he has stated one" (IIG Capital LLC v Archipelago, L.L.C., 36 AD3d 401, 402 [1st Dept 2007] [internal quotation marks omitted]). This entails an inquiry into whether or not a material fact claimed by the pleader is a fact at all and whether a significant dispute exists regarding it (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]; see alsoBiondi, 257 AD2d at 81 ["[t]he motion should be granted where the essential facts have been negated beyond substantial question by the affidavits and evidentiary matter submitted"] [internal quotation marks omitted]).

[*5]Breach of Contract (First Cause of Action)

The first cause of action alleges that plaintiffs provided confidential information to defendants pursuant to the March 5, 2009 Confidentiality Agreement, and that defendants used that confidential information to engage in direct discussions with Leibovitz. Plaintiffs allege that defendants' improper use of the confidential information culminated in the Services Agreement between Leibovitz and Getty U.S. (Complaint, ¶¶ 80-85).

The elements of a cause of action for breach of contract are: (1) the existence of a contract between the plaintiff and the defendant; (2) performance by the plaintiff; (3) the defendant's failure to perform; and (4) resulting damages from the defendant's failure to perform (see Noise in The Attic Prods., Inc. v London Records, 10 AD3d 303, 307 [1st Dept 2004]; Furia v Furia, 116 AD2d 694, 695 [2d Dept 1986]). The essential terms of the parties' purported contract, including the specific provisions upon which liability is predicated, must be alleged (Matter of Sud v Sud, 211 AD2d 423, 424 [1st Dept 1995]; see also Sheridan v Trustees of Columbia Univ. in City of NY, 296 AD2d 314, 315 [1st Dept 2002], lv denied 99 NY2d 505, cert denied 539 US 904 [2003]).

While defendants contend that this cause of action is speculative and conclusory, the court concludes that plaintiffs have a viable cause of action for breach of contract. The complaint alleges that defendants agreed:

(i) to keep all Confidential Information confidential, (ii) to use the Confidential Information solely for purposes of evaluating the Transaction and (iii) not to disclose the Confidential Information to any person other than those of the Receiving Party's Representatives who need to know such Confidential Information solely for the purposes of evaluating the Transaction.

(Complaint, ¶ 79, Exh. 1 [March 5, 2009 Confidential Agreement, ¶ 2]). Plaintiffs further allege that defendants breached the agreement by using the confidential information for a purpose prohibited by the agreement, i.e., to engage in direct discussions with Leibovitz (Complaint, ¶ 82). Moreover, to the extent that defendants seek to rely upon evidence submitted in connection with plaintiffs' motion for a preliminary injunction, it cannot be said that the "essential facts have been negated beyond substantial question by the affidavits and evidentiary matter submitted" (Biondi, 257 AD2d at 81). Indeed, there are significant factual issues as to whether the March 5, 2009 Confidentiality Agreement was breached, which may not be resolved on a motion to dismiss.[FN2] Accordingly, defendants' motion to dismiss the cause of action for breach of contract is denied.

Fraud (Second Cause of Action)

In the second cause of action, plaintiffs allege that, "armed with" confidential information obtained from plaintiffs, defendants "secretly reached out directly to" Leibovitz. According to [*6]plaintiffs, defendants' "repeated requests for information" were made with "fraudulent intent" to induce plaintiffs to provide information to defendants. Plaintiffs further allege that defendants' "fraudulent conduct" resulted in the Services Agreement between Leibovitz and Getty U.S. (Complaint, ¶¶ 92-94).

In order to state a cause of action for fraud, the plaintiff must allege "misrepresentation or concealment of a material fact, falsity, scienter by the wrongdoer, justifiable reliance on the deception, and resulting injury" (Zanett Lombardier, Ltd. v Maslow, 29 AD3d 495 [1st Dept 2006]; see also Kaufman v Cohen, 307 AD2d 113, 119 [1st Dept 2003]). To plead reliance, the plaintiffs are required to "allege that [they were] induced to act or refrain from acting to [their] detriment by virtue of the false representation" (Ideal Steel Supply Corp. v Anza, 63 AD3d 884 [2d Dept 2009]). Moreover, CPLR 3016 (b) requires that "the circumstances constituting the wrong [] be stated in detail." In other words, the plaintiff must " set forth specific and detailed factual allegations that the defendant personally participated in, or had knowledge of any alleged fraud'" (Friedman v Anderson, 23 AD3d 163, 166 [1st Dept 2005], quoting Handel v Bruder, 209 AD2d 282, 282-283 [1st Dept 1994]).

Defendants contend that this cause of action fails, because plaintiffs have not alleged that they made any particular misrepresentation to plaintiffs, or that plaintiffs reasonably relied upon any misrepresentation. They further contend that the complaint fails to plead adequate detail, and that this claim essentially reduces to the allegation that defendants did not intend to honor their obligations under the March 5, 2009 Confidentiality Agreement. The court agrees.

In the complaint, plaintiffs essentially allege that defendants feigned interest in purchasing Leibovitz's archive for the sole purpose of gathering confidential information from plaintiffs in order to structure a deal with her. However, even according plaintiffs the benefit of every possible favorable inference (see Leon, 84 NY2d at 87-88), they have still failed to identify any misrepresentation that defendants made, the contents of such misrepresentations, or that they relied upon such representations to their detriment (see CPLR 3016 [b]). Significantly, plaintiffs never reached a deal on the proposed sale of Leibovitz's archive with defendants.

Furthermore, plaintiffs' fraud claim must be dismissed for the related reason that it is duplicative of, and not collateral to, plaintiffs' viable breach of contract claim (see Raytheon Co. v AES Red Oak, LLC, 37 AD3d 364 [1st Dept 2007]). This cause of action is based upon the same allegations as the breach of contract claim: defendants made representations that they would keep the confidential information confidential, and feigned interest in the transaction for the purposes of misusing that confidential information. In other words, defendants represented that they would abide by the confidentiality agreement, but did not intend to honor those obligations (see Laura Corio, M.D., PLLC v R. Lewin Interior Design, Inc., 49 AD3d 411, 412 [1st Dept 2008]; Fallon v McKeon, 230 AD2d 629, 629-630 [1st Dept 1996] ["the mere allegation that defendant . . . did not intend to honor his contractual obligations does not convert what was essentially a breach of contract action into an action for fraud"]).

Although plaintiffs rely upon the Court of Appeals decision in Pludeman v Northern Leasing Sys., Inc. (10 NY3d 486 [2008]), that reliance is unpersuasive. In Pludeman, the Court reasoned that a fraud claim should not be dismissed for legal insufficiency where "unassailable proof of fraud" is not yet available (id. at 492). Here, in contrast, plaintiffs are alleging that defendants made misrepresentations to them, and thus should know what misrepresentations [*7]were made to them.

Tortious Interference with Contractual Relations (Third Cause of Action)

Plaintiffs' third cause of action alleges that defendants knew about plaintiffs' Sales Agreement with Leibovitz, and that defendants interfered with that agreement by misusing confidential information to negotiate directly with Leibovitz (Complaint, ¶¶ 100-101).

A cause of action for tortious interference with contractual relations requires: (1) the existence of a valid contract; (2) defendant's knowledge of that contract; (3) defendant's intentional procuring of a breach of that contract; and (4) damages (see White Plains Coat & Apron Co., Inc. v Cintas Corp., 8 NY3d 422, 426 [2007]; Burrowes v Combs, 25 AD3d 370, 373 [1st Dept], lv denied 7 NY3d 704 [2006]; Click Model Mgt. v Williams, 167 AD2d 279, 280 [1st Dept 1990], lv denied 77 NY2d 805 [1991]). An essential element of the claim is that the breach would not have occurred "but for" the activities of the defendant (Cantor Fitzgerald Assoc. v Tradition N. Am., 299 AD2d 204 [1st Dept 2002], lv denied 99 NY2d 508 [2003]). "[W]here there is an existing, enforceable contract and a defendant's deliberate interference results in a breach of that contract, a plaintiff may recover damages for tortious interference with contractual relations even if the defendant was engaged in lawful behavior" (NBT Bancorp v Fleet/Norstar Fin. Group, 87 NY2d 614, 621 [1996]).

Here, defendants contend that plaintiffs fail to allege that Leibovitz breached any provision of the Sales Agreement, and that they did not "intentionally procure" any breach. It is true that a breach is an essential element of this cause of action (see Lama Holding Co. v Smith Barney, 88 NY2d 413, 425 [1996] [tortious interference with contract dismissed in part because there was no allegation that a breach actually occurred]; Davis v Williams, 59 AD2d 660, 661 [1st Dept 1977], affd 44 NY2d 882 [1978] [to plead a cause of action for tortious interference with contract, "it is axiomatic that there must be a breach of that contract by the other party"] [internal quotation marks and citation omitted]). But, accepting the allegations as true and according them the benefit of every reasonable inference (see Leon, 84 NY2d at 87-88), the complaint is sufficient to allege a breach by Leibovitz of the Sales Agreement. Plaintiffs allege that they were Leibovitz's exclusive agent for two years after the obligations under the Loan Agreement were satisfied (Complaint, ¶ 15). The Sales Agreement also states that plaintiffs' predecessor was Leibovitz's exclusive agent during the Tail Period (which is defined in the Loan Agreement), and the Loan Agreement has not been provided to the court. Further, it cannot be said, as a matter of law, that defendants did not "intentionally procure" any breach by Leibovitz. Although Leibovitz made representations that she was not a party to any existing agreement that would restrict her ability to provide services pursuant to the Services Agreement (Complaint, Exh. 2 [Services Agreement, § 7 (b)]), whether defendants intentionally procured a breach is a question of fact that may not be resolved at this juncture. Accordingly, the third cause of action is sufficient.

Tortious Interference with Prospective Business Advantage (Fourth Cause of Action)

In the fourth cause of action, plaintiffs allege that defendants have "effectively impacted the value of the proposed transaction" to a prospective client, and caused that client to advise plaintiffs that it is not interested in pursuing the transaction. Additionally, plaintiffs allege that [*8]they have been threatened with the loss of future business with existing and prospective clients (Complaint, ¶¶ 104-106).

The required elements for a claim of tortious interference with prospective business advantage are as follows: (1) the existence of a business relationship between the plaintiff and a third party; (2) the defendants' interference with that business relationship; (3) the defendants acted with the sole purpose of harming the plaintiff or used wrongful means; (4) injury to the plaintiff's relationship with the third party (see Carvel Corp. v Noonan, 3 NY3d 182, 190-191 [2004]).

As for the third element, the plaintiff must show that the defendant's interference with plaintiff's prospective business relations was accomplished by "wrongful means," or that the defendant acted with the sole purpose of harming the plaintiff (Snyder v Sony Music Entertainment, 252 AD2d 294, 300 [1st Dept 1999]). Under the former category, "wrongful means" includes "physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure," but more than mere persuasion (Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183, 191 [1980]). A " defendant's conduct must amount to a crime or an independent tort'" (Lawrence v Union of Orthodox Jewish Congregations of Am., 32 AD3d 304 [1st Dept 2006], quoting Carvel, 3 NY3d at 190). As for the latter category, which is based upon the theory of prima facie tort, the plaintiff must establish that the interference was effected by lawful means without justification (Mandelblatt v Devon Stores, 132 AD2d 162, 168 [1st Dept 1987]). Stated differently, the plaintiff must allege (1) infliction of intentional harm, (2) resulting in special damages, (3) without excuse or justification, (4) by an act or series of acts that would otherwise be lawful (Freihofer v Hearst Corp., 65 NY2d 135, 142-143 [1985]).

This cause of action fails as a matter of law. The complaint does not allege that defendants knew about the potential relationship, nor does it specify the economic relationship that plaintiffs lost (see Caprer v Nussbaum, 36 AD3d 176, 204 [2d Dept 2006] ["knowledge of the prospective economic relationship is an implicit element of interference"]; Vigoda v DCA Prods. Plus, 293 AD2d 265, 266-267 [1st Dept 2002] ["Tortious interference with prospective economic relations requires an allegation that plaintiff would have entered into an economic relationship but for the defendant's wrongful conduct. As plaintiffs cannot name the parties to any specific contract they would have obtained had they performed at the NACA showcase, they have failed to satisfy the but for' causation required by this tort"] [citations omitted]). Therefore, the fourth cause of action is dismissed.

Leave to Replead

Although plaintiffs request leave to replead in their opposition papers, they have not made any showing that the fraud and tortious interference with prospective business advantage claims have any merit. Therefore, the court denies leave to replead these causes of action (see Automoble Coverage, Inc. v American Intl. Group, Inc., 42 AD3d 405, 407 [1st Dept 2007]).

B.Plaintiffs' Motion for a Preliminary Injunction

A preliminary injunction is a drastic remedy which should not be granted unless the movant establishes a clear right to equitable relief (see CPLR 6301; Koultukis v Phillips, 285 [*9]AD2d 433, 435 [1st Dept 2001]). The purpose of a preliminary injunction is to maintain the status quo pending a full hearing on the merits (Jamie B. v Hernandez, 274 AD2d 335, 336 [1st Dept 2000]). To establish entitlement to a preliminary injunction, the movant must show: (1) a likelihood of success on the merits; (2) irreparable harm absent injunctive relief; and (3) that a balancing of the equities favors the movant's position (see Aetna Ins. Co. v Capasso, 75 NY2d 860, 862 [1990]; City of New York v Untitled LLC, 51 AD3d 509, 511 [1st Dept 2008]; Borenstein v Rochel Props., 176 AD2d 171, 172 [1st Dept 1991]). " Proof establishing these elements must be by affidavit and other competent proof, with evidentiary detail'" (Scotto v Mei, 219 AD2d 181, 182 [1st Dept 1996], quoting Faberge Intl. v Di Pino, 109 AD2d 235, 240 [1st Dept 1985]).

With respect to the second element, it is well established that a movant cannot establish irreparable injury if there is an adequate remedy at law, such as money damages (see e.g. Schleissner v 325 W. 45 Equities Corp., 210 AD2d 13 [1st Dept 1994] [preliminary injunction prohibiting landlord from denying tenants access to roof and its use for recreational purposes denied where plaintiffs had adequate remedy for services reduction in the form of money damages]). It is equally settled law that there can be no irreparable injury where the injury has already been sustained (see Allen v Pollack, 289 AD2d 426, 427 [2d Dept 2001]).

In their moving papers, plaintiffs assert that the Services Agreement has impaired the value of the collateral which secures the Loan Agreement, since the Services Agreement values Leibovitz's shoots at far less than her market rate (Ryan Aff., ¶ 59). Plaintiffs also contend that the Services Agreement has impaired the exclusivity of Leibovitz's archive and services (id., ¶ 60). Specifically, the candidate that brought the Services Agreement to plaintiffs' attention has advised them that it is not currently interested in the transaction (id.). Defendants also allegedly continue to improperly use confidential information obtained from ACG by engaging in discussions with Leibovitz and by performing under the Services Agreement (id., ¶ 61). They further point out that, pursuant to the March 5, 2009 Confidentiality Agreement, plaintiffs "shall . . . be entitled to injunctive relief" (March 5, 2009 Confidentiality Agreement, ¶ 9). In reply, plaintiffs assert that, without a preliminary injunction, defendants' misuse of the confidential information is not quantifiable, because it has suffered a loss of "goodwill" associated with its exclusive agency, in addition to the loss of the right to act as exclusive agent for Leibovitz in the transaction consummated under the Services Agreement (Ryan Reply Aff., ¶¶ 14, 17).

However, plaintiffs' assertions are conclusory and insufficient to establish that immediate and irreparable harm would result absent granting injunctive relief (see Technology for Measurement v Briggs, 291 AD2d 902, 903 [4th Dept 2002]). First, plaintiffs merely speculate that defendants continue to use their confidential information (see Golden v Steam Heat, 216 AD2d 440, 442 [2d Dept 1995] ["the irreparable harm must be shown by the moving party to be imminent, not remote or speculative"]). Second, plaintiffs have not adequately shown how the Services Agreement has impaired, or more importantly, will impair, the value of the collateral pledged under the Loan Agreement. The court, therefore, concludes that plaintiffs have an adequate remedy in the form of damages, especially in view of the fact that the Services Agreement between Getty U.S. and Leibovitz has already been executed. Moreover, although the confidentiality agreement declares that money damages would be inadequate in the event of a breach, this does not control whether equitable relief is appropriate (see Firemen's Ins. Co. of [*10]Newark, N.J. v Keating, 753 F Supp 1146, 1154 [SD NY 1990] ["it is clear that the parties to a contract cannot, by including certain language in that contract, create a right to injunctive relief where it would otherwise be inappropriate"]). Therefore, plaintiffs' motion for a preliminary injunction must be denied.

C.Plaintiffs' Application to Seal Court Records

Plaintiffs also make an application for an order sealing the court records pursuant to 22 NYCRR 216.1, and presumptively denominate documents as "FILED UNDER SEAL." They argue that the court records in this action should be sealed, because they contain confidential, non-public business information that was disclosed to defendants pursuant to the March 5, 2009 Confidentiality Agreement. Defendants have not opposed the request.

22 NYCRR 216.1 provides as follows:

(a)Except where otherwise provided by statute or rule, a court shall not enter an order in any action or proceeding sealing the court records, whether in whole or in part, except upon a written finding of good cause, which shall specify the grounds thereof. In determining whether good cause has been shown, the court shall consider the interests of the public as well as of the parties. Where it appears necessary or desirable, the court may prescribe appropriate notice and opportunity to be heard.

(b)For purposes of this rule, "court records" shall include all documents and records of any nature filed with the clerk in connection with the action. Documents obtained through disclosure and not filed with the clerk shall remain subject to orders as set forth in CPLR 3103 (a).

To overcome the presumption of openness, the party seeking to seal documents must demonstrate "good cause" through compelling circumstances to justify secrecy (Mancheski v Gabelli Group Capital Partners, 39 AD3d 499, 502 [2d Dept 2007]). In making this determination, the court must balance the interests of the public as well as of the parties (Doe v New York Univ., 6 Misc 3d 866, 875 [Sup Ct, NY County 2004]). A showing of "good cause" presupposes a showing that public access to the records is likely to harm a significant interest of the movant (Press-Enterprise Co. v Superior Court of California, Riverside County, 464 US 501, 510 [1984]). The First Department has only sanctioned sealing in very limited circumstances, such as to protect trade secrets or preserve the privacy of an infant (see Gryphon Dom. VI, LLC v APP Intl. Fin. Co., B.V., 28 AD3d 322, 324 [1st Dept 2006]), even when both sides have asked the court for sealing (Matter of Hofmann, 284 AD2d 92, 93 [1st Dept 2001]).

Plaintiffs have not shown "good cause" in this case. They have not addressed any specific documents sought to be sealed, which is required in order to meet their burden (see Danco v Labs. v Chemical Works of Gedeon Richter, 274 AD2d 1, 8 [1st Dept 2000] [conclusory sealing of entire record is improper]; L.K. Sta. Group, LLC v Quantek Media, LLC, 20 Misc 3d 1142 [A], *2 [Sup Ct, NY County 2008] [defendants' failure to address specific documents was fatal to request to seal]). Nor have they shown a proper ground for sealing the records, such as [*11]the need for protection of trade secrets. Therefore, the request is denied.[FN3]

CONCLUSION AND ORDER

Based upon the foregoing, it is

ORDERED that the motion (sequence number 001) of plaintiffs Art Capital Group, LLC and Art Capital Group, Inc. for a preliminary injunction is denied; and it is further

ORDERED that the motion (sequence number 002) of defendants Getty Images, Inc. and Getty Images (U.S.), Inc. to dismiss is granted to the extent of dismissing the causes of action for fraud (second cause of action) and tortious interference with prospective business advantage (fourth cause of action), and is otherwise denied; and it is further

ORDERED that the request to seal court records is denied.

This Constitutes the Corrected Decision and Order of the Court.

Dated: July 30, 2009

ENTER:

______________________________

J.S.C. Footnotes

Footnote 1:The March 5, 2009 Confidentiality Agreement defines a "Transaction" as "a potential transaction between ACG [the Disclosing Party] and [Getty] the Receiving Party relating to a potential transaction involving Annie Leibovitz" (Complaint, Exh. 1 [March 5, 2009 Confidentiality Agreement]).

Footnote 2:Defendants argue only that the evidence does not support plaintiffs' allegations that defendants imported precise terms from the Conde Nast Agreement into the Services Agreement, and adopted plaintiffs' proposal as to how to a structure a relationship with Leibovitz. But plaintiffs also allege that defendants misused information relating to the archive (Complaint, ¶¶ 58, 60; Ryan Aff., ¶¶ 13-54).

Footnote 3:If the parties wish to address the future use of allegedly confidential documents or allegedly confidential provisions within any document, they are directed to contact Principal Court Attorney Andrea Field at afield@courts.state.ny.us regarding alternatives to sealing, such as redacting or in camera inspection.