The opinion of the court was delivered by: Greenaway, District Judge.
This matter comes before the Court on defendants' consolidated
motion for summary judgment on Counts III, VII, VIII, XI, XII,
XIII, and XV. The defendants moving for summary judgment are Jim
Long, ("Long")*fn1 (incorrectly named in the Complaint as James
Long) Honest Entertainment Group, ("HEG")*fn2 OneMusic
Corporation, ("OneMusic")*fn3 Telos Holdings, Inc., ("THI")*fn4
Robert Jenkins, ("Jenkins") and Bob Jenkins Music Services
This case arises out of an alleged breach of contract.
Plaintiff Claude Lewin ("Plaintiff") is a salesman in the music
library industry, which involves the compilation and licensing of
music and sound effects for use in radio, television, and other
media productions. Plaintiff contends that defendants Long and
Jenkins used plaintiff to "leverage" a deal that inured to their
benefit and financially injured plaintiff.
Specifically, plaintiff claims that Long and Jenkins induced
plaintiff to resign from his position as FirstCom's Eastern
Division Manager, and to sign an employment contract with
OneMusic. OneMusic's employment contract promised to employ
plaintiff as the marketing and sales director of OneMusic's music
library at a future date. By the terms of the contract, however,
OneMusic retained the right to terminate plaintiff's employment
on one-month's notice.
In addition, plaintiff claims that he negotiated an agreement
(the "OneMusic/Gotham agreement") with OneMusic, whereby OneMusic
promised to market and to sell at a future date a new start-up
music library company called Gotham City Music ("Gotham") in
which plaintiff was a partner. The parties, however, never
executed the OneMusic/Gotham agreement. Even so, plaintiff
contends that these two promises constituted a "package deal"
that enticed plaintiff to resign from his position with FirstCom.
In plaintiff's Amended Complaint, he claims that OneMusic broke
the "package deal" promises. To support his position, plaintiff
contends that OneMusic had a duty to disclose to plaintiff, prior
to when they executed the OneMusic employment contract, the
possibility that FirstCom might purchase part of OneMusic to the
detriment of plaintiff and Gotham.
In plaintiff's Amended Complaint, he alleges Fraud, Breach of
Contract, Intentional Interference with A Prospective Economic
Advantage, and Estoppel. Plaintiff seeks compensatory and
punitive damages from OneMusic, Long, and Jenkins regarding the
Gotham transaction. In addition, plaintiff seeks back pay, front
pay, and punitive damages regarding the OneMusic employment
contract. The defendants seek summary judgment on all counts.
After reviewing the summary judgment proofs, this Court grants
summary judgment on all Counts.
In the fall of 1991, plaintiff became a salesman for defendant
FirstCom. On January 31, 1997, plaintiff resigned from FirstCom.
While employed with FirstCom, plaintiff established himself as an
accomplished salesman, and developed a substantial and lucrative
"book of business" that generated approximately $120,000 in
commissions to plaintiff during his last year at FirstCom.
In September 1996, while still employed with FirstCom,
plaintiff and another FirstCom employee, Emanuel Kallins
("Kallins") formed Gotham.*fn6 The two men hoped to make Gotham
a viable competitor in the music library industry. Kallins agreed
to produce the music, and plaintiff agreed to be responsible for
the sales and marketing of Gotham's music library.*fn7 Because
Gotham was in its early phase of development, plaintiff and
Kallins concentrated on producing music and formulating Gotham's
business and marketing plans.
Part of Gotham's business and marketing plan included acquiring
financing and a viable distribution channel for Gotham's
products. In late October 1996, plaintiff approached Jenkins to
discuss whether BJMS would be interested in financing and
distributing the Gotham music library. Eventually, while still
employed with FirstCom, plaintiff mailed to Jenkins a joint
venture proposal ("the BJMS/G proposal") addressing a possible
BJMS — Gotham relationship.*fn8
Specifically, the BJMS/G proposal expressly contemplated that
BJMS would finance the selling and marketing of the Gotham music
library to FirstCom's clients and customers. Throughout the
proposal, plaintiff attempted to conceal his and Kallins'
identities by "xxx"ing out all references to their names and to
FirstCom. In addition, plaintiff believed that if the wrong
people saw his BJMS/G proposal, his position at FirstCom could be
jeopardized. Plaintiff conceded also that if the BJMS/G proposal
were successful, he intended to resign from FirstCom and to
compete for his FirstCom customer base.
After reviewing the BJMS/G proposal, Jenkins rejected it.
that he and Long were forming a new music library called
OneMusic, of which Jenkins would become the president in January
1997. Jenkins suggested that plaintiff, instead, offer to Long, a
Gotham joint venture proposal with OneMusic. Shortly thereafter,
plaintiff followed Jenkins' advice and proposed to OneMusic an
agreement, which essentially contemplated that, through a written
license and royalty contract, OneMusic would represent the Gotham
music library for a term of ten (10) years. Plaintiff and
OneMusic discussed also the opportunity for OneMusic to hire both
plaintiff and Kallins as employees — hence the "package
deal."*fn9 Jenkins responded that, due to the non-compete
agreements that Jenkins and Long each had with FirstCom, neither
he nor Long could discuss employment opportunities for plaintiff
at OneMusic in connection with any arrangement with Gotham until
after January 1, 1997.
Notwithstanding Jenkins' statement to the contrary, from
October 1996 through January 1997, plaintiff discussed with
Jenkins and Long, his potential employment with OneMusic.
Furthermore, during that same period, plaintiff, Long, and
Jenkins participated in numerous discussions and negotiations
regarding the OneMusic/Gotham agreement. When OneMusic sent the
final draft of the OneMusic/Gotham license and royalty agreement
to plaintiff, plaintiff rejected it and requested further
revisions. The undisputed facts show that the parties never
executed the OneMusic/Gotham agreement.*fn10
On January 28, 1997, Long faxed to plaintiff a draft copy of
his OneMusic employment contract.*fn11 Plaintiff's OneMusic
employment contract contained the express provision that either
party could terminate plaintiff's employment upon one-month's
notice.*fn12 After review, plaintiff made two handwritten
changes, signed the contract, and sent it back to Long.*fn13 On
January 31, 1997, plaintiff and Long signed the altered
employment contract, which incorporated plaintiff's two changes
therein. Plaintiff then submitted a resignation letter to
FirstCom on January 30, 1997, which "serve[d] as a two week
notice.*fn14 Plaintiff's resignation from his Regional Sales
Manager position with
FirstCom became effective February 14, 1997.
At the time plaintiff resigned, the OneMusic/Gotham agreement
had not been signed. Plaintiff, however, alleges that a verbal
agreement had been reached with respect to key terms. Plaintiff
claims further that he, Long, and Jenkins agreed that their
verbal agreement would be memorialized in writing.
OneMusic contends that it forwarded to plaintiff a written
draft of the OneMusic/Gotham proposal on January 31, 1997. The
facts show that plaintiff refused to accept OneMusic's initial
draft. Approximately two weeks after plaintiff received the draft
from OneMusic, his attorney*fn15 sent to OneMusic, a four page
letter requesting substantial revisions to the draft. Although
negotiations between OneMusic and Gotham continued throughout
February 1997, the parties never reached a meeting of the minds
and never executed an agreement.
Nevertheless, on January 31, 1997, plaintiff entered into and
signed an employment contract with OneMusic, which expressly
provided that plaintiff's employment could be terminated by
either party at any time, and for any reason, on one month's
notice. The employment contract stated also that plaintiff's
employment with OneMusic would begin on or before March 1, 1997;
that plaintiff was to be paid $75,000 annually, or an average
earned commission of 8%, whichever was greater; that plaintiff
was to receive 1,000 shares of stock in OneMusic; that OneMusic
would pay his COBRA medical coverage; and that OneMusic would
contract with, market, and sell Gotham, (plaintiff's own music
library), for a period of at least five years.
The employment contract enumerated plaintiff's duties.
Specifically, as the Eastern Division Manager of OneMusic,
plaintiff would market and sell both OneMusic's and Gothams's
music libraries to businesses located on the east coast,
including New Jersey.*fn16 Plaintiff claims that OneMusic's
promises to hire him and to provide financial assistance to
Gotham were a "package deal."*fn17 Unbeknownst to plaintiff,
however, while he negotiated with OneMusic, OneMusic was
simultaneously searching for outside financing, was negotiating
for office space for its sales and marketing force in Dallas,
Texas, and was discussing with other music library companies the
possibility of representing their libraries. Long claims that
ultimately, OneMusic wanted to compete with FirstCom.
Long explained that OneMusic's plan to compete with FirstCom
changed "dramatically" on February 13, 1997, when he met with
Clive Calder ("Calder"), the Chairman of Zomba, FirstCom's parent
company. Another meeting with Calder took place on February 14,
1997. At these meetings, Long and Calder discussed a possible
FirstCom/OneMusic distribution deal. After further negotiations,
Long and Calder executed a FirstCom/OneMusic distribution deal on
February 25, 1999.
On February 24, 1994, Long informed plaintiff that OneMusic and
FirstCom had negotiated a distribution agreement; that OneMusic
had been sold to FirstCom; that FirstCom had exercised its
contractual right to terminate plaintiff's employment; and that
plaintiff would receive a severance check representing one
month's salary. Long then invited plaintiff to fly to OneMusic's
office in Nashville, Tenn., to meet with Cecelia Garr ("Garr"),
the President and Chief Executive Officer of FirstCom, to hear an
employment proposal that Garr had for plaintiff.
On February 25, 1997, Plaintiff flew to the Nashville meeting,
wherein Garr offered to plaintiff a position with FirstCom to
sell OneMusic's music library. Long suggested to plaintiff that
he accept Garr's offer. Plaintiff dismissed Long's suggestion and
rejected Garr's offer. Also, at that meeting, Long tendered to
plaintiff a check from OneMusic representing one month's salary
in the amount of $5,833.33, in accordance with the terms of the
employment contract.*fn19 At that same meeting, Long advised
plaintiff that OneMusic would not provide financial support and
distribution assistance to Gotham, but suggested that Gotham
pursue a similar agreement with FirstCom. Plaintiff dismissed
Long's second suggestion.*fn20 Eventually, plaintiff sold his
interest in the copyrights to Gotham's music library and accepted
a position as a salesman for KillerTracks, a division of BMG
Entertainment ("BMG"). At KillerTracks, plaintiff is currently
responsible for selling BMG's music library. During the past two
years, plaintiff's income at KillerTracks has been approximately
$60,000 per year — half of the salary that he had earned during
his last year with FirstCom.
In sum, defendants argue that the undisputed evidence shows
that defendants did not induce plaintiff to resign from FirstCom;
that plaintiff initiated contact with defendant regarding the
OneMusic/Gotham agreement; that until February 13, 1997, OneMusic
had not considered the possibility that FirstCom might distribute
OneMusic's library; that the FirstCom/OneMusic deal was not
signed until February 25, 1997 — after OneMusic hired
plaintiff; and that once the FirstCom/OneMusic deal was signed,
OneMusic promptly advised plaintiff of same and terminated
plaintiff, in accordance with the terms of plaintiff's and
OneMusic's executed employment contract. Defendants concede that
they engaged in preliminary discussions with FirstCom regarding
the possibility that FirstCom might distribute OneMusic's music
library, while simultaneously negotiating with plaintiff.
Defendants hasten to add that the possibility of a FirstCom
buyout was remote prior to February 1997, considering Long's
pending lawsuit against FirstCom.
In addition, defendants contend that the undisputed facts
establish that prior to Long's February 13, 1997, meeting with
Calder, OneMusic was actively preparing to compete with FirstCom.
For example, defendants point out that OneMusic was seeking to
obtain office space in Dallas for its marketing and sales force;
that OneMusic had hired plaintiff and others in an effort to
build that sales force; that OneMusic was actively pursuing
outside financing to fund that effort; and that OneMusic was
actively discussing representation arrangements with another
independent music library to amass enough product to compete in
STANDARD FOR SUMMARY JUDGMENT
Federal Rule of Civil Procedure 56(c) provides for summary
judgment when the moving party demonstrates that there is no
genuine issue of material fact, and the evidence establishes the
moving party's entitlement to judgment as a matter of law. See
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548,
91 L.Ed.2d 265 (1986); Orson, Inc. v. Miramax Film Corp.,
79 F.3d 1358, 1366 (3d Cir. 1996). In making this determination, the
court must draw all reasonable inferences in favor of the
nonmovant. See Hullett v. Towers, Perrin, Forster & Crosby,
Inc., 38 F.3d 107, 111 (3d Cir. 1994); National State Bank v.
Federal Reserve Bank of New York, 979 F.2d 1579, 1581 (3d Cir.
Once the moving party has satisfied its initial burden, the
party opposing the motion must establish that a genuine issue as
to a material fact exists. See Jersey Cent. Power & Light Co. v.
Township of Lacey, 772 F.2d 1103, 1109 (3d Cir. 1985). The party
opposing the motion for summary judgment cannot rest on mere
allegations, but must present actual evidence that creates a
genuine issue as to a material fact for trial. See Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91
L.Ed.2d 202 (1986); Siegel Transfer, Inc. v. Carrier Express,
Inc., 54 F.3d 1125, 1130-31 (3d Cir. 1995). "[U]nsupported
allegations in [a plaintiff's] memorandum and pleadings are
insufficient to repel summary judgment." Schoch v. First
Fidelity Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990); see
also Fed.R.Civ.P. 56(e) (requiring non-moving party to "set
forth specific facts showing that there is a genuine issue for
trial"). In determining whether there are any issues of material
fact, the Court must resolve all reasonable doubts as to the
existence of a material fact against the moving party. See Smith
v. Pittsburgh Gage and Supply Co., 464
543 F.2d 870, 874 (3d Cir. 1972). "In other words, the inquiry
involves determining, whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law." Pitak
v. Bell Atlantic Network Svcs., Inc., 928 F. Supp. 1354, 1366
(D.N.J. 1996) (citations and internal quotations omitted).
This matter is before the court based on diversity
jurisdiction. The employment contract involved in this case,
however, expressly provides for the application of Texas law. In
addition, the parties do not dispute that the law of Texas
governs the contract. In New Jersey, "[w]here a contract
expresses a clear intent to have a particular jurisdiction's law
govern, the parties' choice of law will apply unless it violates
the public policy of New Jersey." Haynoski v. Haynoski,
264 N.J. Super. 408, 413, 624 A.2d 1030 (App. Div. 1993) (citation
omitted). Texas law is in accord. "Texas courts have long
recognized that parties to a contract . . . may specify in the
instrument that it is to be governed by the law of a particular
state and that law will apply. . . ." Whitley v. Hartford
Accident and Indem. Co., 532 F. Supp. 190, 194 (N.D.Tex. 1981)
(citing Dugan v. Lewis, 79 Tex. 246, 14 S.W. 1024, 1026
(1891)). The parties have not argued that the application of New
Jersey law to the instant dispute would contravene New Jersey
public policy. This Court finds no basis to conclude that such
would be the ...