Robinson v Day 2019 NY Slip Op 30153(U) January 16, 2019 Supreme Court, New York County Docket Number: /2010 Judge: O. Peter Sherwood Cases

Transcription

1 Robinson v Day 2019 NY Slip Op 30153(U) January 16, 2019 Supreme Court, New York County Docket Number: /2010 Judge: O. Peter Sherwood Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's ecourts Service. This opinion is uncorrected and not selected for official publication.

2 -;.:::: ==- -==-=== ==---== --== =====================:::::;::::=::::;::::::::::::;::;::::::;:=::::::;:::::::=::::;:=::::::::====~ [*!FILED: 1] NEW YORK COUNTY CLERK 01/17/ :51 Pi SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART ~ ADAM ROBINSON, -against- Plaintiff, LAURA DAY, DAVID J. DEPINTO, ROBINSONDA Y, LLC and LAURA DAY, INC., and DEPINTO NORNES & ASSOCIATES, LLP, Defendants ~ 0. PETER SHERWOOD, J.: DECISION AND ORDER Index No.: /2010 Motion Sequence No.: 028 Under Motion Sequence Number 028, defendant Laura Day ["LD"], Laura Day, Inc ["LDI"] and Robinson Day LLC ["RDLLC"] [together "the Day Parties"] move for enforcement of the soordered settlement agreement in this case. For the reasons set forth below, the motion shall be granted. I. BACKGROUND In this action filed by plaintiff Adam Robinson ["AR"] in April, 2010 against his former girlfriend and companion, the second amended complaint alleges 36 causes of action, including constructive trust, fraud and rescission. It also asserts a claim of legal malpractice against the David DePinto and DePinto Nomes and Associates, LLP law firm ("DePinto Parties"). The parties executed a Settlement Agreement on February 7, 2018, and an Addendum on March 6, 2018 (the "Agreement" or "Settlement Agreement") (Bowler affirmation, exhibits A, B), both intended to provide a framework for concluding eight years of contentious litigation regarding breach of various contracts that assigned to Day "an interest in certain royalties from [The Princeton Review] ("TPR") and Random House" (mem at 9). The Agreement was so-ordered on March 6, 2018 (Bowler affirmation, exhibit A at 3). The Agreement provides, in relevant part, as follows: 1 2 of 12

3 [*[FILED: 2] NEW YORK COUNTY CLERK 01/17/ :51 P~ Royalty Payments: The Royalties are owned 100% by Laura Day, Inc. LDI assigns 25% to AR during his lifetime to terminate upon AR's death and thereafter, all future royalty payments revert to LDI. (It is a condition precedent to the assignment that LDI. received [sic] general releases as set forth below, and sign off on TPR litigation as set forth below). I (id at 1). Escrow: It is a condition precedent to LD' s obligations to perform, that the money is released from escrow. LDI to pay AR $200,000 following the release of funds from escrow. Katzman/ TPR Action: AR irrevocably instructs TPR to pay pursuant to the terms of this Agreement. Release: All parties (and any business entities owned or controlled by LD or AR) execute mutual general releases and AR's release extends to Peter Samson Day. The funds in escrow refer to the money paid to the court's escrow pursuant to orders entered by now retired Justice Schweitzer on December 9, 2012 and January 6, 2010 (DePinto opp at 2). These funds were held by the New York City Department of Finance ("NYCDF") and the New York State Office of the Comptroller, Office of Unclaimed Funds. On July 9, 2018, this court granted the Day Parties' motion to release the funds to LDI (mem at 13; Bowler affirmation, exhibit R [Escrow Order]). That order provided, in relevant part that "the New York City Department of Finance, the New York State Office of the Comptroller, Office of Unclaimed Funds, and any other persons or agencies having possession of the subject funds... shall pay out and distribute the said monies... in their entirety, to Laura Day., Inc." (Bowler affirmation, exhibit R). On August 10, 2018, LDI received $1,726, from the New York City Department of Finance (Bowler affirmation, exhibit S [ACH Detail Report]). Counsel for the Day Parties have advised the court of receipt of $1,498, from the Office of the New York State Comptroller on December 18, 2018 and of payment of $200,000 to counsel for AR. Further, Random House has 2 3 of 12

4 [*[FILED: 3] NEW YORK COUNTY CLERK 01/17/ :51 PM remitted $34, in additional funds to State Comptroller's the Office of Unclaimed Funds where they are currently being held. In this motion, the Day Parties seek to enforce the Agreement in light of Robinson's failure to instruct the Royalty Payors that, pursuant to the Agreement, Laura Day is the 100% owner of the royalties and is entitled to payment of the royalties, $195, as of the filing of the motion, and all future royalties (mem at 6). The Day Parties presented TPR with a redacted copy of the Agreement, but TPR's counsel has requested "instructions, signed by the Day Parties, Mr. Robinson and their counsel, for the disbursement of the [Royalties]" because Day is not a party to the underlying royalty agreement, or any agreement with TPR (id at 14; Bowler affirmation, exhibit Q). Robinson refuses to cooperate and instead proposes to instruct TPR only "to pay Ms. Day 75% and to pay Mr. Robinson 25% during his lifetime... once Ms. Day makes the assignment" but not as to Day's 100% ownership (id. at 15; see also Bowler affirmation, exhibit V). The Day Parties seek court intervention as "the only acceptable irrevocable instruction... is that Laura Day, Inc, is the sole owner of the Royalties and all Royalties are to be paid to Laura Day, Inc." (id. at 17). II. ARGUMENTS The Day Parties argue that "Robinson's receipt of financial benefits from the Day Parties under the Settlement Agreement - $200,000 and 25% of future Royalties during his lifetime- is... subject to the satisfaction of several conditions precedent" (id. at 1-2). First, Robinson is not entitled to the $200,000 payment until all of the royalties currently in escrow are released to Laura Day (id at 3). Because the total amount that.was held in escrow has not yet been released, "the Day Parties are under no obligation to [pay Robinson $200,000]" (id at 13). However, as the court stated above, the $200,000 payment was delivered to Robinson's counsel. Accordingly, this issue is moot and requires no further attention by the court. Second, Day does not assign future royalties to Robinson for his lifetime until five conditions precedent are met: (i) Robinson must make an irrevocable instruction that the payors of the royalties make payment to Laura Day, Inc., (ii) the payors must enter into a written agreement to pay according to the terms of the Agreement, (iii) payors and John Katzman must provide Laura Day, Inc. with releases, (iv) Day must "sign off' on TPR litigation, and (v) the parties must exchange releases (that also extend to Day's son) and discontinue this, settled action (id. at 4). 3 4 of 12

5 [*[FILED: 4] NEW YORK COUNTY CLERK 01/17/ :51 Pi I These conditions precedent are important to ensure Robinson's cooperation because Robinson has a close relationship with TPR, as well as a contract "whereby TPR contractually agreed... not to transfer the Royalties to anyone other than Robinson - even in the face of a court order" (id. at 4, Bowler affirmation, exhibit 0 [Katzman/ TPR Settlement Agreement]). The Day Parties argue that where an agreement provides for conditions precedent, such conditions "must be enforced according to their express terms" (US. Bank NA. v GreenPoint Mtge. Funding, Inc., 147 AD3d 79, 88 [1st Dept 2016]; xlon Beauty, LLC v Day, 2018 NY Misc LEXIS 258, 2018 Slip Op 20142(U) at **10, (Sup Ct, NY County, Jan. 22, 2018). Although not required, the parties have used the specific term "condition precedent" in the Agreement. "The rules of construction of contracts require us to adopt an interpretation which gives meaning to every provision of a contract" (Muzak Corp. v Hotel Taft Corp., 1 NY2d 42, 46 [1956]). The Agreement puts forth a "sequence and hierarchy of settlement terms" that must be enforced in order to give the Agreement full effect (mem at 21). Until all of the conditions precedent are met, Day remains the 100% owner of the royalties (id.). To date, none of the conditions precedent have been met, and Robinson refuses to direct TPR to make any payments to LDI. Robinson is therefore in breach of the Settlement Agreement and has violated the court's order by refusing to "instruct TPR that Laura Day, Inc., is the 100% owner of the Royalties... and to pay $195, and future royalties to Laura Day, Inc." (id at 6). In opposition, Robinson contends that "the Settlement Agreement provides, in the present tense, that the Royalties are currently owned 100% by LDI, and that LDI currently assigns 25% of the Royalties to Robinson" (Robinson opp at 2). The only conditions precedent are that LDI must secure general releases, and "waive claims against TPR, Random House, and John Katzman in consideration of their agreement to 'pay [Day] in accordance with [the] terms [of the "Royalty Payments" section of the Settlement Agreement]" (id.). Robinson must make only one '"irrevocabl[e]' instruction to TPR to pay 'pursuant to the terms of [the] Agreement'" (id. at 5). Therefore, Robinson is currently assigned 25% of the Royalties and has made the required instruction by virtue of the Agreement. Robinson maintains that the Settlement Agreement is unambiguous on its face - "the Day Parties receive 100% of the escrow, pay Robinson $200,000 from these funds, and receive 75% of the royalties during Robinson's lifetime. The Day Parties' ownership of the royalties and 4 5 of 12

6 [*[FILED: 5] NEW YORK COUNTY CLERK 01/17/ :51 P~ assignment of 25% of the royalties to Robinson for his lifetime are agreed as of the date of the Settlement Agreement" (id at 3). Robinson argues that the Day Parties reach their interpretation by reading portions of the Settlement Agreement- i.e. that "[t]he Royalties are owned 100% by Laura Day, Inc." - in isolation, as opposed to properly reading the document as a whole. (id. at 6). Even if the court determines that the Settlement Agreement is ambiguous, "[i]n the context of the provisions regarding the Katzmanff PR Action, it is evident that the parties intended that the irrevocable instruction to TPR was for payment directly to the parties according to a percentage split of 75/25" (id.). In a separate memorandum of law in opposition, the DePinto Parties request that the Day. Parties now provide releases to DePinto Law and its insurer. The DePinto Parties agree with Robinson that the Day Parties "read into the Settlement Agreement numerous conditions precedent that simply do not exist" (DePinto opp at 1 ). The Settlement Agreement provides for just two conditions precedent - (i) "it is a condition precedent to the assignment that LDI received [sic] general releases as set forth below, and sign off on TPR litigation as set forth below;" and (ii) "it is a condition precedent to LD's obligations to perform, that the money is released from escrow" (Ratner affirmation, exhibits 1 and 2 [Settlement Agreement and Addendum]). The DePinto Parties maintain that the caselaw cited by the Day Parties in support of their arguments for a reading of five conditions precedent to performance are in fact cases where there were clear, express conditions precedent in the agreements at issue (DePinto opp at 4, citing Goldman v White Plains Center for Nursing Care, LLC, 11 NY3d 173 [2008] [contract was unambiguous in indicating that the contract would end after two years unless an extension was agreed upon]; xlon Beauty, LLC, 2018 NY Misc LEXIS at 258 [contract explicitly required "at least thirty (30) days written notice of any photo/ video shoots or public appearances"]; MHR v Presstec, Inc., 12 NY3d 640 [2009] [contract contained express condition that funds should not be released from escrow "unless and until" the lender consents]). The DePinto Parties concede that payment of the remaining funds held by the State Comptroller to the Day Parties is a condition precedent to obtaining the releases that they seek (DePinto opp at 1-2). 1 Nonetheless, they request that in the meantime, the Day Parties should execute "releases to DePinto Law (and its insurer) which will be held in escrow until the Day 1 DePinto parties attach a blank release form as Exhibit 4 to Ratner affidavit. 5 6 of 12

7 [*[FILED: 6] NEW YORK COUNTY CLERK 01/17/ :51 P~ Parties receive the Royalties that have been paid into Court" (id at 2). In the event that the Day Parties have lingering concerns over releasing DePinto Law's insurer, "Plaintiff and DePinto Law have offered to disclose the release provisions of its separate settlement agreement to satisfy the Day Parties' articulated concern that a carve-out had been created that would allow the insurer to commence a subrogation action against the Day Parties" (id. at 6). In a court-authorized reply to Robinson's opposition memorandum of law, the Day Parties argue that Robinson's assertion that he was assigned 25% of the royalties as of the date of the Settlement Agreement ignores the clear, express condition that the assignment is conditional upon receipt of general releases. Because the releases have not yet been executed, the 25% of the royalties has not yet been assigned and is not currently payable (reply at 3). The use of the present tense in stating that "LDI assigns 25% to AR during his lifetime" does not overshadow the express condition that immediately follows that statement (id. at 4, citing Salus Capital Partners, LLC v Moser, 2018 NY Misc LEXIS 3494, *14-15 [Sup Ct, NY County, Aug 15, 2018] [Sherwood, J.S.C] [stating that the court "must construe the contract to give meaning and effect to the material provisions and should not render any provision meaningless"). The Day Parties also contend that with regard to their request that Robinson give an instruction to TPR, Robinson's argument again ignores the plain language of the Settlement Agreement. Robinson argues that "the Settlement Agreement requires Robinson to make only one irrevocable instruction to TPR and the other Royalty Payors" (reply at 5-6). The document, however, states that "AR irrevocably instructs" - not "AR makes one instruction" (Bowler affirmation, exhibits 1, 2). The Day Parties reiterate that "any instruction regarding assignment of 25% of the future Royalties to Robinson during his lifetime is dependent upon the satisfaction of certain conditions" (reply at 5-6). In connection with this provision, the Day Parties describe how they were motivated to include in the Settlement Agreement "a precise sequence to perform... prior to Robinson's receipt of a benefit" in order to mitigate against Robinson's influence over the royalties payers, particularly TPR (id at 6). In reply to the DePinto Parties' memorandum of law in opposition, the Day Parties note that the DePinto Parties argue only for a release to be provided to DePinto's insurer (reply at 9). The insurer, however, is not a party to this action or to the Settlement Agreement, which makes no reference to a release ofdepinto's insurer (id.). The Agreement provides that "[a]ll parties (and 6 7 of 12

8 [*[FILED: 7] NEW YORK COUNTY CLERK 01/17/ :51 P~ any business entities owned or controlled by LD or AR) execute mutual general releases and AR's release extends to Peter Samson Day" (Bowler affirmation, exhibit 1 at 1 ). The Day Parties therefore have no obligation to provide the requested release (reply at 10). DePinto's "sole basis for asking [for the release of its insurer] stems from its belated and unsuccessful efforts to negotiate a resolution involving a subrogation waiver" (id at 11 ). This request constitutes another application for affirmative relief without relevance to the underlying motion and should be denied (id. at 9). Finally, the Settlement Agreement does not provide for a piecemeal exchange of releases, and the Day Parties are not required to exchange general releases with DePinto before the rest of the parties exchange releases (id at 12). The Settlement Agreement provides that "all parties [] execute mutual general releases" (Bowler affirmation, exhibit 1 at 1). DePinto's request that this court "provide releases to DePinto Law (and its insurer) which will be held in escrow" should therefore be denied (reply at 12). III. DISCUSSION "Stipulations of settlement are judicially favored, will not be lightly set aside, and 'are to be enforced with rigor and without a searching examination into their substance' as long as they are 'clear, final and the product of mutual accord"' (Forcel/ia v Geico Corp., 109 AD3d 244, [2d Dept 2013]). "[S]ettlement agreements are subject to the principles of contract law" (id.). "The fundamental rule of contract interpretation is that agreements are construed in accord with the parties' intent... and '[t]he best evidence of what parties to a written agreement intend is what they say in their writing'... Thus, a written agreement that is clear and unambiguous on its face must be enforced according to the plain terms, and extrinsic evidence of the parties' intent may be considered only if the agreement is ambiguous [internal citations omitted]" (Riverside South Planning Corp. v CRP!Extell Riverside LP, 60 AD3d 61, 66 [1st Dept 2008], affd 13 NY3d 398 [2009]). Whether a contract is ambiguous presents a question of law for resolution by the courts (id. at 67). Courts should adopt an interpretation of a contract which gives meaning to every provision of the contract, with no provision left without force and effect (see RM 14 FK Corp. v Bank One Trust Co., NA., 37 AD3d 272 [1st Dept 2007]). It falls to the court to determine, as a matter of law, whether an express condition precedent exists in a contract (see Two Guys from Harrison-NY v S.F.R. Realty Assoc., 63 NY2d 396, of 12

9 [*[FILED: 8] NEW YORK COUNTY CLERK 01/17/ :51 Pi ' [1984]; Comprehensive Health Solutions v Trustco Bank, Natl. Assn., 277 AD2d 861, 863 [3rd Dept 2000]). "[A] contractual duty ordinarily will not be construed as a condition precedent absent clear language showing that the parties intended to make it a condition" ( Unigard Security Ins. Co. v North Riv. Ins. Co., 79 NY2d 576, 581 [1992]), or "where the act to be done by the plaintiff must naturally precede, in the order, of time what the defendant is called upon to do, and where the former is necessary to be done to enable the defendant to perform" (Tipton v Feitner, 20 NY 423, 425 [1859]). As a preliminary matter, the Agreement is unambiguous. It is "clear, final and the product of mutual accord" Forcellia, 109 AD 3d at 247. It requires satisfaction of two conditions that must be satisfied before LDI assigns 25% of her future Royalty Payments to Robinson. Specifically, it requires receipt by LDI of the general releases referenced in the Agreement and "sign off [by LD.I] on the TRP litigation as set forth below." 2 The Day Parties maintain that by virtue of the phrase "as set forth below," there are five conditions precedent that must be satisfied as follows: (i) (ii) (iii) (iv) (v) Robinson irrevocable instruction to the Royalty Payors to pay the Royalties to Laura Day, Inc. pursuant to the terms of the Settlement Agreement, the Royalty Payors' written agreement to pay pursuant to the terms of the Settlement Agreement, Laura Day, Inc. 's receipt of releases from the Royalty Payors and John Katzman, the related TPR Litigation is signed off on and discontinued, and the parties exchange releases (also covering Day's son) and discontinue the current, settled action. (Day Parties memo at 3-4). This characterization of the terms of the Agreement is only partially accurate. 2 As to the TRP litigation, the Agreement provides: AR irrevocably instructs TPR to pay pursuant to the terms of this Agreement. In consideration of TPR/Random House/Katzman agreement in writing to pay royalties directly to recipient in accordance with terms above and in consideration of a full general release in favor of LD from TPR/K.atzman/Random House, LD waives claims against them. AR shall use best efforts to cause TPR/K.atzman/Random House to execute a stipulation of discontinuance of all claims and counterclaims with prejudice and without costs. 8 9 of 12

10 [*[FILED: 9] NEW YORK COUNTY CLERK 01/17/ :51 Pi As to the first alleged condition precedent, the Agreement does require such instruction. Regarding the second alleged condition precedent, the Agreement contemplates the Royalty Payors' written agreement but does not require it. The Agreement contemplates that such written agreement be part of any settlement of the TPR litigation. Although not an express "condition precedent," the Agreement obligates Robinson to use his "best efforts" to settle the TPR litigation. That settlement would include a "discontinuance of all claims and counterclaims with prejudice and without costs" (id). As practical matter any such settlement would have to be in writing, provide for or at least reference the Royalty payments allocation and precede any actual payout of Royalties. Moreover, the contemplated written agreement would likely (and should for sake of clarity) reference the Agreement, include a recitation that the "Royalties are owned I 00% by Laura Day, Inc." and that "LDI assigns 25% to [Robinson]" or words to that affect. With respect to the third and fourth alleged conditions precedent, the Agreement does not (and cannot) mandate that the Royalty Payors and Katzman provide a release to LDI. However, Robinson is contractually obligated to use his best efforts to obtain it and also to secure an opportunity for LDI to "sign off' as a part of settlement of the TPR litigation. As to the fifth alleged condition precedent, there is a requirement for exchange of releases and discontinuance of this case. With regard to the DePinto parties demand, as parties to the Agreement, DePinto and the Day Parties are obligated to exchange mutual releases. There is no requirement that a release be given to DePinto's insurance carrier. The Day Parties are justified in expecting that DePinto, as parties to the Agreement, would not enter into any understanding with its insurer that would expose the Day Parties to a new round of litigation. It is appropriate therefore that DePinto provide assurances or evidence that no right of subrogation against the Day Parties has been given by DePinto to its insurer. However, under all the circumstances, it would be appropriate for the parties to execute such a release upon a showing of evidence that allays the concerns of the Day Parties regarding a potential subrogation claim by the insurer. By so doing, the parties would satisfy their mutual goal of achieving a final settlement. IV. CONCLUSION In summary, pursuant to the Agreement, Robinson is required to instruct the Royalty Payors that LDI is 100% owner of the Royalties and to cooperate in obtaining the documentation needed to effectuate the terms of the Agreement. Upon receipt of the instructions which shall be 9 10 of 12

11 [*[FILED: 10] NEW YORK COUNTY CLERK 01/17/ :51 Pi in a form reasonably acceptable to the Royalty Payors and Katzman, exchange of the releases identified in the Agreement and upon execution of a written agreement with TPR/Random House/Katzman to pay royalties directly to Robinson (25% during his lifetime and thereafter 100% to Laura Day, Inc. and Laura Day, Inc. 75%). LDI shall execute and deliver to the Royalty Payors (copy to Robinson) the assignment provided for in the Agreement. No Royalty payments should be made by the Royalty Payors until the required written agreements have been signed and delivered (to the proper party or escrow agent) and the general releases exchanged. Accordingly, it is hereby ORDERED that the motion to compel of the Day Parties is GRANTED in part and is otherwise denied; and it is further ORDERED and ADJUDGED that Adam Robinson shall promptly, and in no event later than 21 days after service of this Decision and Order with notice entry, (1) provide to the Royalty Payors (copy to Laura Day, Inc.) irrevocable written instructions that the Royalties are owned I 00% by Laura Day, Inc. Said written instructions shall be in a form that is reasonably acceptable. to the Royalty Payors and shall also be signed by LOI and any other persons reasonably requested by the Royalty Payors. It shall include a statement that LOI assigns 25% to AD during his lifetime to terminate upon his death and thereafter, all further royalty payments revert to LOI; (2) in the same written instruction, Robinson shall request the Royalty Payors to pay Laura Day Inc. and him in accordance with the terms of the Agreement (75/25%); (3) shall use his best efforts to settle the TRP litigation which settlement shall provide. for discontinuance of all claims and counterclaims with prejudice and without costs; and it is further ORDERED and ADJUDGED that the parties to this litigation shall execute and exchange of mutual releases as provided for in the Agreement; and it is further ORDERED that the above referenced writings once fully executed shall be exchanged at the same time but in the event the parties are unable to agree on such simultaneous exchange within 35 days after service of this Decision and Order with notice of entry, the executed writings shall be delivered to a special master to be appointed by the court with Robinson~ the Day Parties and the DePinto Parties each bearing one-third of the cost thereof; and it is further of 12

12 [*[FILED: 11] NEW YORK COUNTY CLERK 01/17/ :51 Pi ORDERED that all parties exchange mutual releases within the 21 day period referenced above which releases (or separate writing) to include an assurances by the DePinto Parties that no subrogation rights as against the Day Parties have been or will be assigned to any third party and upon receipt of said assurance in a form reasonably acceptable to the Day Parties, the Day Parties shall execute a general release in favor of DePinto' s insurer; and it is further ORDERED that if a stipulation of discontinuance of this case has not been filed by April 19, 2019, the parties and their counsel shall appear at a compliance hearing on Tuesday, April 23, 2019 at Noon in Part 49, Courtroom 252, 60 Centre Street, New York, New York. This constitutes the decision and order of the court. DATED: January 16, 2019 ENTER, 0. PETER SHERWOOD J.S.C of 12