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Elevator Media, Inc. v. Hoffman

August 29, 2006

ELEVATOR MEDIA, INC., PLAINTIFF(S),
v.
JOHN B. HOFFMAN, ET AL, DEFENDANT(S).



The opinion of the court was delivered by: Honorable Robert B. Kugler

Rule 52 FINDINGS OF FACT AND CONCLUSIONS OF LAW

INTRODUCTION

Plaintiff is a Delaware Corporation owned and operated by Daniel Bornstein. He claims to have developed a unique and profitable concept for selling advertising posters for placement in elevators and laundry rooms. Defendant John B. Hoffman owns and operates defendant Applied Media, Inc. On November 13, 2002, Bornstein and Hoffman, through their respective companies, signed two agreements, a Licensing Agreement and a Management Services Agreement. Hoffman was to enter the elevator advertising business as a licensee of Elevator Media.

Plaintiff claims defendants violated these agreements, haven't paid what they owe, and seek damages and injunctive relief. Damages consist of a claimed balance due of $90,000, for the license as well as 30% of all revenue received by defendants. Defendant denies any breach, denies any payments are due, and seeks return of a $10,000, deposit.

The Court heard testimony on January 8, 2004, January 9, 2004 and January 15, 2004, and on January 30, 2004, denied plaintiff's motion for a Preliminary Injunction. After an appeal (since dismissed) and discovery, the Court held a non-jury trial on August 16, 2006. The parties elected to rely heavily on the prior testimony but presented additional testimony from Hoffman and Bornstein. Counsel submitted additional financial records of defendant Applied Media, by letter dated August 17, 2006.

Jurisdiction is based upon diversity of citizenship, 28 U.S.C. §1332(a). The following represents the Court's findings of fact and conclusions.

FINDINGS OF FACT

1. In 2001, Donald Bornstein formed plaintiff Elevator Media, Inc., for the express purpose of licensing and franchising an elevator and laundry room business which he had started in New York. 5T*fn1 : 68-17 to 69-6; 1T:62-24 to 63-9.

2. Bornstein approached a potential franchisee/licensee named David L. Bartholomew in late 2000. 2T:200-15.

3. Bornstein explained his concept and Bartholomew paid him $10,000. 2T:202-19. It is not at all clear what Bartholomew hoped to get out of that relationship. 2T:200-20 to 203-11; 2T:218-5.

4. Bartholomew introduced Bornstein to John B. Hoffman. 2T:204-1 to 9.

5. Bornstein and Hoffman signed two documents on November 13, 2002.*fn2 One was titled as a Licensing Agreement. Ex. P-2. The other was titled a "Management Services Agreement." Ex. P-3.

6. The Licensing Agreements produced at trial by the two parties were different. 2T:179-14 to 180-4. Plaintiff's copy had a restrictive covenant. Defendants' did not. 2T:175-10 to 16. No one could explain why.

7. Neither Licensing Agreement contains an amount for the licensing fee. Ex. P-2. Bornstein believed it was to be $100,000. 1T:30-17. Hoffman paid a $10,000 "deposit". 1T:30-12. Ex. P-4. There is a notation on Hoffman's check which states "Deposit for License." Ex. P-4. Hoffman believed there was no agreement as to any further payments and he could get the $10,000, back if the business didn't work. 2T:149-25 to 150-12. Bartholomew, who was present for the negotiations and signing of the agreements, testified the $10,000, was a "good faith payment" to "get started." 2T:207-19 to 208-22. Hoffman, according to Bartholomew, was to pay an additional $90,000, once he had 250 units (elevators). 2T:208-23 to 209-6. Moreover, again according to Bartholomew, if the business wasn't successful, Bornstein would give the ...


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