Fink v Laslo

[*1] Fink v Laslo 2012 NY Slip Op 50474(U) Decided on March 15, 2012 Supreme Court, Suffolk County Emerson, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 15, 2012
Supreme Court, Suffolk County

David Fink d/b/a Carl Levine Consulting & Licensing, Plaintiff,

against

Larry Laslo, Defendant.



35026-09



DAVID FINK

Plaintiff Pro Se

100 Main Street P.O.B. 101

Wainscott, New York 11975

PORZIO, BROMBERG & NEWMAN, P.C.

Attorneys for Defendant

156 West 56th Street, Suite 803

New York, New York 10019

Elizabeth Hazlitt Emerson, J.

Upon the following papers numbered1-56read on these motions for summary judgment ; Notice of Motion and supporting papers 1-27; 33-51 ; Notice of Cross Motion and supporting papers; Answering Affidavits and supporting papers 28-30; 52-55 ; Replying Affidavits and supporting papers 31-32; 56 ; it is,

ORDERED that these motions by the plaintiff and the defendant, respectively, for summary judgment are determined as follows:

Carl Levine Consulting & Licensing ("CLCL") is a licensing agency that brings together [*2]designers who wish to license their designs and trademarks for home furnishings with manufacturers of such products. CLCL is compensated for its services by receiving a fixed share of the royalties generated by the sales of home furnishings using such licensed designs. Carl Levine was the sole proprietor of CLCL. He died on November 26, 2004, leaving all of his interest in CLCL, including the net royalties and net licensing fees derived therefrom, to the plaintiff, David Fink, his domestic partner of 24 years.

The defendant, Larry Laslo, is in the business of designing and licensing his name on home furnishings. On August 21, 1998, Laslo entered into a licensing agreement with Carl Levine (the "1998 Agreement") for an initial term of five years. Paragraph 1 of the 1998 Agreement provided that it would be automatically renewed for additional one-year periods unless either party gave the other written notice of termination at least 90 days prior to the expiration thereof. The initial term was from September 1, 1998, until August 31, 2003. Paragraph 2 gave

CLCL the exclusive right to license Laslo's designs and trademarks for home furnishings, as well as those of related entities in which Laslo was an officer, director, or owner of at least a 50% interest ("Related Entities"). Under paragraph 3, CLCL's responsibilities included negotiating royalty agreements; overseeing the production of prototypes; monitoring the marketing, promotion, and quality of Laslo's products; keeping Laslo informed and providing him with status reports, among other things. Under paragraph 4, CLCL was paid 25% of any gross royalties, advances, or other consideration paid to Laslo by licensees pursuant to a CLCL Licensing Agreement.

Paragraph 4 defines a "CLCL Licensing Agreement" as: (i) any licensing agreement for home furnishings that Laslo or a Related Entity entered into during the term of the 1998 Agreement, (ii) any licensing agreement for home furnishings that Laslo or a Related Entity entered into within one year after the end of the term of the 1998 Agreement with any licensee for whom Laslo and CLCL formatted a presentation during the term of the1998 Agreement or with whom Laslo or CLCL communicated during the term of the 1998 Agreement, and (iii) any extension, modification or replacement licensing agreement for home furnishings that Laslo or a Related Entity entered into during the term of any CLCL Licensing Agreement or within two years after the expiration thereof. Paragraph 4 gives the following as an example of the last category:

During the Term of this agreement, you enter into an agreement with Licensee X for sheets for six years. That agreement is a CLCL Licensing Agreement. During the sixth year of that agreement, you and Licensee X enter into an agreement for towels or china. That agreement for towels or china is also a CLCL Licensing Agreement. If a CLCL Licensing Agreement is extended or replaced after the Term of this agreement so that the licensee continues to use the original licensed designs "ABC" and adds new licensed designs "XYZ," then the replacement is also a CLCL Licensing Agreement, and the foregoing division and payment of royalties shall continue as to the original licensed designs "ABC" and also as to the new licensed designs [*3]"XYZ."

Paragraph 4 further provides, "The foregoing division and payment of gross royalties, advances and other consideration of any nature payable by the licensee under any CLCL Licensing Agreement shall continue for so long as the CLCL Licensing Agreement (as extended, renewed, modified or replaced) is in effect or products using licensed designs or trademarks are sold, which ever is later, whether or not this agreement between you and CLCL has been extended or has been terminated pursuant to the following paragraph."

The "following paragraph" is paragraph 5(a), which provides as follows:

Neither you nor I shall have the right to assign our respective rights under this agreement without the prior written consent of the other party. Upon the death or incapacity of Larry Laslo or Carl Levine, the survivor shall have the right to terminate this agreement by giving, at least sixty days prior to the effective date thereof, written notice of such termination to the incapacitated party or whoever may have been lawfully appointed as the Executor or Administrator of the decedent's estate, provided, however, that no such termination shall be construed to reduce the incapacitated party's or the decedent's estate's share of gross royalties, advances and other consideration of any nature payable by the licensee under any CLCL Licensing Agreement as set forth in paragraph 4 above.

On July 12, 1999, Laslo, along with Lois and Kenneth Wyse (doing business as "Las Lois"), entered into another licensing agreement with CLCL (the "1999 Agreement") for an initial term of five years, which would be automatically renewed for additional two-year periods unless either party gave the other written notice of termination at least 90 days prior to the expiration thereof. Like the 1998 Agreement, the 1999 Agreement gave CLCL the right to license home furnishing products for a 25% royalty. CLCL's responsibilities under the 1999 Agreement were the same as its responsibilities under the 1998 Agreement, and the definition of a CLCL Licensing Agreement thereunder was also the same. The penultimate paragraph of the 1999 Agreement provides, as follows:

The foregoing division and payment of gross royalties, advances and other consideration of any nature payable by the licensee under any CLCL Licensing Agreement shall continue for so long as the CLCL Licensing Agreement (as extended, renewed, modified or replaced) is in effect or products using licensed designs or trademarks are sold, which ever is later, whether or not this agreement between you and CLCL has been extended or has been terminated.

There is nothing in the 1999 Agreement that prevents its assignment, nor is there any provision for its termination upon the death or incapacity of either party.

Shortly before Carl Levine died, Laslo terminated the 1998 Agreement pursuant to paragraph 1 thereof. By a letter dated May 19, 2004, Laslo advised Levine that he was terminating the 1998 Agreement effective August 31, 2004, and requested a list of all CLCL [*4]Licensing Agreements thereunder. By a subsequent letter dated June 9, 2004, Laslo again requested a list of all CLCL Licensing Agreements under the 1998 Agreement. Levine died on November 26, 2004. His last will and testament was admitted to probate on June 7, 2005. It bequeathed to Fink all of Levine's interest in CLCL, including the net royalties and net licensing fees derived therefrom. On February 26, 2009, the executor of Carl Levine's estate assigned to Fink all of the right, title, and interest in CLCL, including the 1998 and 1999 Agreements.

The plaintiff commenced this action against Laslo on or about September 4, 2009, alleging that Laslo had failed to pay over to Fink all of the royalties paid to Laslo under the 1998 Agreement since November 26, 2004, the date of Carl Levine's death. The plaintiff subsequently amended the complaint to add royalties purportedly paid to Laslo under the 1999 Agreement. The amended complaint contains three causes of action for an accounting of all royalties, for an order directing Laslo to turn over copies of all CLCL Licensing Agreements that he entered into during the six years prior to the commencement of this action, and for an order directing him to pay over to the plaintiff 25% of all gross royalties paid to him since November 26, 2004, except to the extent already paid. Both sides now move for summary judgment.

Laslo has established, prima facie, his entitlement to judgment as a matter of law with regard to the 1999 Agreement. Laslo has produced evidence in admissible form that the 1999 Agreement between him, Lois and Kenneth Wyse (doing business as "Las Lois"), and Carl Levine was separate from and wholly unrelated to the 1998 Agreement between him and Levine and that no royalties were paid under the 1999 Agreement. The affidavits of Laslo and Kenneth Wyse in support of summary judgment reveal that Lois Wyse, a well-known author of children's books, and her nephew Kenneth approached Laslo about forming a business called "Las Lois" to design illustrations for Ms. Wyse's books. Laslo and the Wyses then entered into an agreement with Levine (the 1999 Agreement) in which Levine would get royalties if his contacts in the home-furnishings industry entered into licensing agreements with Las Lois to produce children's furniture and other home furnishings based on Laslo's designs. Laslo's initial designs were rejected by Ms. Wyse, and no further designs were ever created. Thus, no CLCL Licensing Agreements were ever entered into under the 1999 Agreement. The plaintiff has failed to produce any evidence in opposition thereto. His bald, conclusory assertion that dozens of CLCL Licensing Agreements were entered into under both the 1998 and 1999 Agreements is insufficient to defeat summary judgment (see, Spaulding v Benenati, 57 NY2d 418, 425). Accordingly, the complaint is dismissed insofar as the 1999 Agreement is concerned.

Laslo contends that the plaintiff is not entitled to any royalties under the 1998 Agreement because the assignment of that agreement to Fink is void under the express terms thereof, because the 1998 Agreement is a personal-services contract, and because Laslo never consented to the assignment of the 1998 Agreement to Fink. Contrary to Laslo's contentions, the term "successor or assign" only applies to a person to whom property passes by the voluntary act of the owner and not to one who receives it by operation of law (Fidelity Trust Co. of New York v Brooklyn Properties Corp., 229 App Div 544, 548). The right to receive royalties under the 1998 Agreement passed to Fink by operation of law. [*5]

It is a presumption of law that, in the absence of express words, the parties to a contract intend to bind not only themselves, but their personal representatives (Francis v Ferguson, 246 NY 516, 518). An ordinary covenant against assignment does not bind the executors of a decedent's estate and is not broken by a transfer of property by operation of law (Francis v Ferguson, supra). To prohibit a transfer by operation of law, the covenant must be drawn so as to expressly prohibit such a transfer (Id.). The use of general language is insufficient (Id.). Thus, in the absence of unequivocal language prohibiting Carl Levine's legal representative from assigning the 1998 Agreement, the provisions of that agreement may not be construed to prohibit the executor of Levine's estate from assigning the 1998 Agreement without Laslo's consent, despite the general anti-assignment clause contained therein (see, Matter of David, 275 AD2d 964, 965; Morris v Canadian Four State Holdings [Appeal No. 2], 254 AD2d 705, 706). If it had been the intention of the parties that the executor of Levine's estate should not dispose of the 1998 Agreement as an asset of the estate, the provision against assignment should have been directed to that particular fact (see, Francis v Ferguson, supra at 519). The duty of the executor requires him to administer and settle the estate with due diligence (Id.). Under the terms of the 1998 Agreement, Laslo had the right to refuse to consent to an assignment, which could have prevented the executor from disposing of an estate asset, thereby interfering with the orderly and prompt administration of the estate (Id.; see also, Cavanaugh v 133-22nd Street Jackson Heights, Inc., 245 AD2d 481, 482). Such interference is not permitted in the absence of specific language dictating that result (Id.). Accordingly, the court finds that the general anti-assignment clause contained in the 1998 Agreement was insufficient to prohibit the executor of Levine's estate from transferring the agreement to Fink.

Laslo contends that, since the 1998 Agreement was terminated before Levine died pursuant to paragraph 1 thereof, the plaintiff is not entitled to any royalties due under CLCL Licensing Agreements entered into post-termination. Laslo also contends that any royalties due under CLCL Licensing Agreements entered into prior to termination of the 1998 Agreement should only be paid for a reasonable period of time (i.e., one year) post-termination.

It is well settled that the court's role in interpreting contracts is to ascertain the intention of the parties at the time they entered into the contract. If that intent is discernible from the plain meaning of the language of the contract, there is no need to look further, even if the contract is silent on the disputed issue (Evans v Famous Music Corp., 1 NY3d 452, 458). Agreements should be read as a whole to ensure that undue emphasis is not placed upon particular words and phrases (Rosenthal v Quadriga Art, Inc., 69 AD3d 504, 507; see also, Carucci v Kaplan,AD2d, 2012 NY Slip Op 01583 [2d Dept, 2012]) and to give full meaning and effect to its material provisions (CNR Healthcare Network, Inc. v 86 Lefferts Corp., 59 AD3d 486, 489). The court's reading of the contract should not render any portion thereof meaningless (Id.). Any interpretation that gives effect to all of the terms of an agreement is preferable to one that ignores terms or accords them an unreasonable interpretation (Ruttenberg v Davidge Data Systems Corp., 215 AD2d 191, 196). If possible, the contract should be interpreted to give effect to its general purpose (CNR Healthcare Network, Inc. v 86 Lefferts Corp., supra). [*6]

The court finds that the 1998 Agreement provides for the payment of royalties with respect to CLCL Licensing Agreements entered into pre- and post-termination for as long as the CLCL Licensing Agreement has been extended or licensed products are sold, whichever is later, whether the termination was pursuant to paragraph 1 or paragraph 5(a). Laslo's interpretation of the 1998 Agreement fails to take into account that the language of paragraph 4 defines a CLCL Licensing Agreement, not only as any licensing agreement entered into during the term of the 1998 Agreement, but also as any licensing agreement entered into within one year after the end of the term of the 1998 Agreement with any licensee for whom Laslo and CLCL formatted a presentation or with whom they communicated during the term of the 1998 Agreement and any extension, modification or replacement licensing agreement entered into during the term of any CLCL Licensing Agreement or within two years after the expiration thereof. That definition and the ensuing example clearly contemplate the payment of royalties with respect to CLCL Licensing Agreements entered into after the term of the 1998 Agreement has ended. The court finds that Laslo has placed undue emphasis on the final few words of the last sentence of paragraph 4, which provides that royalties shall continue for as long as a CLCL Licensing Agreement has been extended or licensed products are sold, whichever is later, whether or not the 1998 Agreement is extended or has been terminated pursuant to paragraph 5(a). A reading of the 1998 Agreement as a whole leads this court to conclude that the parties did not intend for royalties to cease under those CLCL Licensing Agreements entered into after termination of the 1998 Agreement if the termination was pursuant to paragraph 1, while Levine was still alive, but not pursuant to paragraph 5(a), after he had died. The court finds that such an interpretation is unreasonable as a matter of law. The court also finds that the one-year limitation on royalty payments that Laslo seeks to impose on CLCL Licensing Agreements entered into before the 1998 Agreement was terminated is contrary to the express terms of that agreement. Accordingly, the plaintiff is entitled to summary judgment on the issue of liability insofar as the 1998 Agreement is concerned.

In view of the foregoing, the branch of the motion by Laslo which is for leave to amend his answer to include a counterclaim to recover royalty payments that have already been paid to the plaintiff is denied. Additionally, Laslo has failed to submit a copy of his proposed amended answer with his motion for the court's review (see, Branch v Abraham & Strauss Dept. Store, 220 AD2d 474, 475).

Finally, triable issues of fact preclude summary judgment on the issue of damages. Accordingly, the parties are directed to proceed to trial on the issue of damages. [*7]

DATED:March 15, 2012

J. S.C.