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LEWIN v. LONG

November 22, 1999

CLAUDE LEWIN, PLAINTIFF,
v.
JAMES LONG, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Greenaway, District Judge.

  OPINION

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 ("BJMS").*fn5

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.

Once plaintiff resigned from FirstCom, he signed an employment contract with OneMusic. Before plaintiff began working for OneMusic, however, FirstCom and OneMusic executed an agreement (the "FirstCom/OneMusic deal") that obviated OneMusic's need for plaintiff's services. Specifically, the FirstCom/OneMusic deal provided that FirstCom would purchase OneMusic, and that OneMusic could use FirstCom's marketing and sales force to sell the OneMusic music library. As a result of the FirstCom/OneMusic deal, OneMusic no longer needed to establish its own marketing and sales force. OneMusic, therefore, exercised its rights under its contract with plaintiff and terminated his employment. In addition, OneMusic ended its negotiations with plaintiff regarding Gotham.

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.

FACTS

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.

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.

On April 24, 1997, plaintiff initiated this action against defendants seeking redress for plaintiff's alleged injuries.*fn21 In his Amended Compliant, plaintiff alleges fraud, breach of contract, intentional interference with a prospective economic advantage, and estoppel.

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 the marketplace.

DISCUSSION

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. 1992).

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 West Page 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).

1. Choice of Law

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 ...


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