FILED: NEW YORK COUNTY CLERK 07/25/2012 INDEX NO. 652582/2012 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 07/25/2012 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ARTISTS RIGHTS ENFORCEMENT CORP., v. Plaintiff, JOSEPH ROBINSON, JR.; SUGAR HILL RECORDS LTD.; SUGARHILL MUSIC PUBLISHING, LTD.; TWENTY NINE BLACK MUSIC; and GAMBI MUSIC, INC., Index No. COMPLAINT Defendants. Plaintiff ARTISTS RIGHTS ENFORCEMENT CORP., through its undersigned attorneys, hereby complains of defendants JOSEPH ROBINSON, JR.; SUGAR HILL RECORDS LTD; SUGARHILL MUSIC PUBLISHING, LTD.; TWENTY NINE BLACK MUSIC; and GAMBI MUSIC, INC. as follows: JURISDICTION AND VENUE 1. Plaintiff ARTISTS RIGHTS ENFORCEMENT CORP. ( AREC ) is a corporation organized and existing under the laws of the State of New York, with its principal place of business in New York, New York. 2. Defendant JOSEPH ROBINSON, JR. ( Robinson ) is an individual residing in Englewood, New Jersey. AREC is informed and believes, and thereon alleges, that Robinson is an owner and operator of, and/or controls in some manner, the entity defendants named herein. AREC is informed and believes, and thereon alleges, that Robinson transacted and continues to transact business in the City of New York, State of New York.
3. AREC is informed and believes, and thereon alleges, that defendant SUGAR HILL RECORDS LTD. ( SHR ) is a corporation organized and existing under the laws of the State of New Jersey with a principal place of business at 443 Liberty Road, Englewood, New Jersey. 4. AREC is informed and believes, and thereon alleges, that defendant SUGARHILL MUSIC PUBLISHING, LTD. ( SMP ) is a corporation organized and existing under the laws of the State of New Jersey with a principal place of business at 443 Liberty Road, Englewood, New Jersey. 5. AREC is informed and believes, and thereon alleges, that defendant TWENTY NINE BLACK MUSIC ( Twenty Nine ) is a corporation organized and existing under the laws of the State of New Jersey with a principal place of business at 443 Liberty Road, Englewood, New Jersey. 6. AREC is informed and believes, and thereon alleges, that defendant GAMBI MUSIC, INC. ( Gambi ) is a corporation organized and existing under the laws of the State of New Jersey with a principal place of business at 443 Liberty Road, Englewood, New Jersey. Hereinafter, Robinson, SHR, SMP, Twenty Nine and Gambi will be collectively referred to as the Sugarhill Entities unless otherwise indicated. 7. AREC is informed and believes, and thereon alleges, that the Sugarhill Entities transact substantial business within and derive substantial revenue from business in the State of New York, County of New York. BACKGROUND The Federal Action: Caesar, et al. v. Sugarhill, et al. 8. For more than thirty (30) years, AREC has specialized in assisting artists, songwriters and music publishers with the collection of royalties and other fees due them from the Complaint 2
exploitation of their artistic material and/or musical performances. 9. Beginning in 1999, AREC, on behalf of the following songwriters, artists and music publishers: Melvin Glover, Eddie Morris, Nathaniel Glover, Jr., Guy Todd Williams, The Estate of Robert Keith Wiggins, Sharon Green Jackson, Keith Caesar, Kevin Smith, Rodney Stone and Reginald A. Payne (collectively, the Original Artist Plaintiffs ), asserted claims on their behalf against, among others, the Sugarhill Entities, for unpaid royalties and other fees. 10. In 2001, the Original Artist Plaintiffs filed an action against certain of the Sugarhill Entities in the United States District Court for the Southern District of New York, entitled Caesar, et al. v. Sugarhill, et al., Case No. 01-Civ 6180 (the Federal Action ). The Federal Action sought the recovery of mechanical royalties and other fees due them as a result of their authorship of several musical compositions, as well as artist royalties (which are not at issue herein). THE SETTLEMENT AND JUNE 14, 2002 ORDER 11. On or about June 14, 2002, the parties to the Federal Action settled the Federal Action and a So Ordered settlement was entered on the record by United States District Court Judge Richard M. Berman (the June 14 Order ). 12. Among other things, the June 14 Order required the Sugarhill Entities to: (1) pay to AREC on behalf of the Original Artist Plaintiffs the sum of $225,000.00 in nine (9) separate installments; and (2) enter into a written Settlement Agreement ( Settlement Agreement ) that required the Sugarhill Entities to, among other things: (i) provide AREC with all licenses issued by them for the Original Artist Plaintiffs musical compositions at any time from January 1, 1997 through the present; (ii) provide AREC with letters of direction instructing third parties to pay directly to AREC mechanical royalties for certain compositions written by the Original Artist Complaint 3
Plaintiffs; (iii) provide letters of direction to all performing rights societies (i.e., BMI, ASCAP and SESAC) to pay directly to AREC performance royalties for certain compositions written by the Original Artist Plaintiffs; and (iv) account and pay to AREC any licensing income the Sugarhill Entities received from third parties for compositions written by the Original Artist Plaintiffs. THE SUGARHILL ENTITIES BREACHES OF THE JUNE 14 ORDER 13. With the exception of making the first installment payment required by the June 14 Order, the Sugarhill Entities failed and refused to execute the Settlement Agreement. Accordingly, another conference was held before Judge Berman on March 12, 2003, wherein the parties agreed, among other things: (1) to the terms of a Rider to the Settlement Agreement which was required to be signed within ten (10) days; and (2) that the parties would execute the Settlement Agreement as drafted by counsel for the Original Artist Plaintiffs. This agreement was So Ordered by the Court (the March 12 Order ). 14. Notwithstanding the March 12 Order, the Sugarhill Entities continued to fail and refuse to execute the Settlement Agreement. The Sugarhill Entities also failed and refused to abide by the remaining terms of the June 14 and March 12 Orders. 15. AREC is informed and believes, and thereon alleges, that the Sugarhill Entities, in an attempt to evade their obligations under the June 14 and March 12 Orders, engaged the services of an attorney named Randall Cutler to write a letter to AREC, purportedly on behalf of Melvin Glover and Eddie Morris, attempting to allegedly withdraw them from the settlement of the Federal Action. As a result of this purported withdrawal, the Sugarhill Entities requested another conference before Judge Berman. Complaint 4
16. On April 15, 2003, the parties once again appeared before Judge Berman who ordered that the parties contact Mr. Cutler to participate. Mr. Cutler was contacted but failed and refused to appear. 17. During this conference, counsel for the Original Artist Plaintiffs presented the Court and the Sugarhill Entities with declarations signed by Messrs. Glover and Morris affirming that neither of them retained nor authorized Mr. Cutler to act on their behalf, nor did they ever consent to their withdrawal from the settlement of the Federal Action. Further, Messrs. Glover and Morris reaffirmed their appointment of AREC as their irrevocable agent. As a result of the above, another agreement was So Ordered by the Court (the April 15 Order ), under which Messrs. Glover and Morris reaffirmed that AREC was their irrevocably appointed agent for, among other things, the receipt of royalty reports and royalty income. 1 18. To avoid any issue as to Messrs. Glover and Morris retention of AREC, the April 15 Order specifies at Paragraph 6 that the parties shall refrain from any conduct that would frustrate this order, the So Ordered Memorandum of March 12, 2003, the So Ordered Memorandum of June 14, 2002, the Settlement Agreement or Rider in this Action. Further, the parties specifically agreed at Paragraph 26 of the Rider that for all matters related to the action and/or the compositions thereunder, Defendants shall deal directly and solely with AREC. The State Action: Artists Rights Enforcement Corp., et al. v. Robinson, et al. 19. As a result of the Sugarhill Entities continued refusal to execute the Settlement Agreement, or abide by the remaining terms of the June 14, March 12 and April 15 Orders, AREC, as a third party beneficiary, filed an action against the Sugarhill Entities on May 12, 2003 in the New York County Supreme Court entitled Artists Rights Enforcement Corp. v. Joseph 1 Hereinafter, the June 14, March 12 and April 15 Orders will collectively be referred to as the Orders unless otherwise indicated. Complaint 5
Robinson, et al., Index No. 601495/03 (the State Action ). In the State Action, AREC sought compensatory and punitive damages for breach of contract, tortious interference with contractual relations, tortious interference with prospective economic advantage, breach of third party beneficiary contracts and declaratory relief. THE PARTIES SETTLEMENT AND THE SUGARHILL ENTITIES SUBSEQUENT BREACHES THEREOF 20. In spite of this filing, AREC continued its attempt to resolve the matter through settlement. The Sugarhill Entities finally executed the Settlement Agreement on or about June 13, 2003. However, at this time, the Sugarhill Entities refused to sign the Rider as agreed and amended by the March 12 and April 15 Orders, choosing instead to sign a unilaterally modified Rider which was rejected by the Original Artist Plaintiffs. 21. After making the first three (3) payments and signing the Settlement Agreement, the Sugarhill Entities failed to timely remit to AREC the June 30, 2004 payment of $25,000.00. Accordingly, on July 14, 2004, the parties met at AREC s offices and agreed in writing that: (1) the Sugarhill Entities would pay the June 30, 2004 installment payment on July 14, 2004; (2) counsel for the Original Artist Plaintiffs would prepare a revised Rider with terms reviewed, amended and agreed to during said meeting; and (3) all of the Sugarhill Entities previously agreed to reporting and payment deadlines would be extended to September 15, 2004 (the July 2004 Agreement ). 22. On or about August 12, 2004, the Sugarhill Entities executed the Rider. 23. Other than physically signing the Rider, the Sugarhill Entities did not comply with the July 14 Agreement. They did not provide any documentation and/or payment to AREC by the close of business on September 15, 2004 or an agreed upon extended date of September 21, 2004. Complaint 6
24. On or about September 22, 2004, the Sugarhill Entities delivered to AREC a package of documents that: (1) failed to include a full accounting; (2) failed to include all issued licenses; (3) failed to include payment for any licenses; and (4) included insufficient and incomplete letters of direction. 25. Further, and in direct contravention of the irrevocable language set forth in the Settlement Agreement, the April 15 Order and Paragraph 26 of the Rider, AREC is informed and believes, and thereon alleges, that the Sugarhill Entities hired yet another attorney for Mr. Glover in an effort to frustrate his relationship with AREC and in breach of all of the foregoing. This attorney, Renata Lowenbraun wrote the Sugarhill Entities stating that Mr. Glover was allegedly once again withdrawing from the settlement of the Federal Action. AREC is further informed and believes, and thereon alleges, that the Sugarhill Entities drafted a similar letter for Morris signature. Although these letters were addressed to the Sugarhill Entities and directly affected AREC s rights, the authors did not provide AREC, or anyone else representing Messrs. Glover and/or Morris with copies of the same. 26. On or about November 5, 2004, the Sugarhill Entities proffered to AREC another package that included, among other things: (1) incomplete accountings; (2) two money orders and one bank check in the total amount of $3,892.92 without any notation as to the application of said monies; and (3) a letter from the Sugarhill Entities stating that all licensing income due Mr. Glover, as per the terms of the Settlement Agreement, had been paid directly to him -- instead of AREC as required under the Orders, the July 2004 Agreement, the Settlement Agreement and the Rider. Additionally, the Sugarhill Entities withheld from AREC all writer income due Messrs. Glover and Morris and all licenses issued by the Sugarhill Entities concerning their musical compositions. Complaint 7
27. The Sugarhill Entities continued pattern of failing and refusing to comply with the Orders, the Settlement Agreement and the Rider resulted in AREC moving the State Action to trial in July of 2007. On the third day of trial, the parties settled the State Action by reaffirming the Settlement Agreement as modified by the Rider. Additionally, the parties agreed to further modify Paragraph 6.2 of the Settlement Agreement to require that in the event that either party receives a license request, or a payment for a license, and does not inform the other party thereof after 15 days notice, the party in receipt shall owe the other the payment, as well as a bonus in the amount of twenty percent (20%) of the amount otherwise owed. This settlement was entered on the record before the trial judge, by the Honorable Helene E. Friedman (the July 2007 Agreement ). 2 The LATEST Attempts to Divert Royalties From AREC 28. On December 1, 2010, AREC and Steven Ames Brown, an attorney for the Original Action Plaintiffs, were informed by Tracie Parry of the Rhino Entertainment Group ( Rhino ) that Lita Rosario, Esq., an attorney purporting to represent Messrs. Glover and Morris, sent a letter to Rhino demanding that all of her clients future royalty statements and payments be sent directly to them, and not to AREC. 3 29. Similarly, in early 2011, Ms. Rosario sent a letter to Sanctuary Records ( Sanctuary ) in the United Kingdom (another record company that remits artist royalties to Messrs. Glover and Morris), demanding that all of her clients future royalty statements and payments be sent directly to them, and not to AREC. Sanctuary has placed Messrs. Glover and Morris accounts on hold. 2 Hereinafter the Settlement, July 2004 and July 2007 Agreements will collectively be referred to as the Agreements unless otherwise indicated. 3 On December 2, 2010 AREC received a similar letter from Ms. Rosario. Complaint 8
30. In July, 2011, AREC discovered a nationwide advertising campaign for DirecTV entitled That s The Truth... Truth utilized the musical composition for The Message, which was written in part by Messrs. Glover and Morris. 31. Accordingly, on July 11, 2011 AREC contacted the Sugarhill Entities inquiring as to the status of any license agreement and/or payment that might exist for use of the musical composition for The Message. Additionally, AREC reminded the Sugarhill Entities of their obligation under Paragraph 5.6 of the Settlement Agreement, which requires them to: (1) submit to AREC copies of any license, or other authorization entered into within ten (10) days of receipt; and (2) remit to AREC a twelve and a half percent (12.5%) share of the writer income. 32. In response thereto, on August 1, 2011, AREC received a letter from the Sugarhill Entities counsel indicating that the Sugarhill Entities received: (1) an August 2, 2010 letter from Mr. Glover advising that AREC no longer represents him; and (2) a November 22, 2010 letter from Ms. Rosario which stated that AREC no longer had authority to receive payments on behalf of Messrs. Glover and Morris. Ms. Rosario s letter further requested that all future royalty statements and payments be sent directly to her clients, and that they also be provided copies of all royalty statements and payments previously remitted to AREC. 33. On August 2, 2011, Mr. Brown sent a letter to the Sugarhill Entities reminding them that AREC was appointed the irrevocable representative for Messrs. Glover and Morris, with the right to receive all payments and the sole authority to change the payment address. No response was ever received from the Sugarhill Entities. 34. Notwithstanding the above, AREC has not received any royalty statements or payments from the Sugarhill Entities since 2010. 35. AREC is informed and believes, and thereon alleges, that the Sugarhill Entities are Complaint 9
accounting directly to Messrs. Glover and Morris. FIRST CAUSE ACTION BREACH OF CONTRACT 36. AREC incorporates herein by reference, to the extent applicable, each and every allegation contained hereinabove. 37. As set forth above, the Sugarhill Entities agreed to and/or executed all of the Orders, Agreements and the Rider. The Orders, Agreements and the Rider remain in full force and effect. 38. AREC, as the irrevocable and exclusive agent of the Original Artist Plaintiffs, has performed all of its duties and obligations under the terms of the Orders, Agreements and the Rider. 39. By virtue of the Orders, Agreements and the Rider, AREC is entitled to receive from the Sugar Hill Entities all monies due and owing Messrs. Glover and Morris. 40. AREC is informed and believes, and thereon alleges, that the Sugarhill Entities are well aware of AREC s right to receive one-hundred percent (100%) of these monies. 41. AREC has performed all of its duties and obligations under the Orders, Agreements and the Rider. Further, the Original Artist Plaintiffs have and continue to perform any obligations required on their part. 42. AREC, as the irrevocable agent for Messrs. Glover and Morris, is informed and believes, and thereon alleges, that the Sugar Hill Entities have breached the Orders, Agreements and the Rider by, among other things: (1) failing and refusing to provide to AREC complete copies of all licenses executed by the Sugarhill Entities for musical compositions written by Messrs. Glover and Morris; (2) failing and refusing to provide to AREC a full and complete accounting of all monies received by Sugarhill Entities on account of Messrs. Glover and Morris; (3) inducing Complaint 10
Messrs. Glover and Morris to attempt to repudiate their written agreements with AREC and their reaffirmations of the same; (4) paying directly to Messrs. Glover and Morris licensing income, which was required to be paid only to AREC; and (5) withholding from AREC all monies due and owing to Messrs. Glover and Morris. 43. As a direct and proximate result of Defendants conduct, AREC has been damaged in an amount unknown to it at this time. 44. In addition to all income that is required to be paid to AREC from the Sugarhill Entities, under the terms of the Orders, Agreements and the Rider, AREC is entitled to receive a bonus of 20% of the total of any license fee that remains unpaid. SECOND CAUSE ACTION DECLARATORY RELIEF 45. AREC incorporates herein by reference, to the extent applicable, each and every allegation contained hereinabove. 46. An actual controversy exists among AREC on the one hand, and the Sugarhill Entities on the other hand, as to the parties respective duties and obligations under the terms of the Orders, Agreements and the Rider with respect to the following: (1) the Sugarhill Entities contractual obligations to provide AREC with licenses, accountings, payments and letters of directions; and (2) whether the Sugarhill Entities can withhold any payment from AREC on account of monies due Messrs. Glover and Morris. 47. AREC has no adequate remedy at law. 48. Accordingly, this Court is requested to make a judicial determination of the rights, duties and obligation of the parties hereto under the terms of the Orders, Agreements and the Rider. Complaint 11
WHEREFORE, AREC prays for judgment against the Sugarhill Entities as follows: (a) (b) For an award of compensatory damages in an amount unknown to it at this time; For a further award of compensatory damages amounting to 20% of the total of any license fee that remains unpaid pursuant to the specific terms of the settlement of the State Action ; (c) For an Order of this Court that pursuant to the terms of Orders, Agreements and the Rider, the Sugarhill Entities are required to provide to AREC full and complete production of licenses, accountings, and payments; (d) For an award of AREC s actual costs incurred for this action, including, but not limited to, reasonable attorneys fees; (e) (f) (g) For an award of prejudgment and post judgment interest on all sums; For an award of exemplary damages; and For such further relief as justice may require, or as this Court deems necessary. Dated: New York, New York July 25, 2012 By: Stephanie A. Prince, Esq. Attorney At Law 452 Park Place, #2C Brooklyn, NY 11238 (347) 915-5364 sprincelaw@gmail.com To: JOSEPH ROBINSON, JR. 443 Liberty Road, Englewood, New Jersey 07631 SUGAR HILL RECORDS LTD. 443 Liberty Road, Englewood, New Jersey 07631 Complaint 12
SUGARHILL MUSIC PUBLISHING, LTD. 443 Liberty Road, Englewood, New Jersey 07631 TWENTY NINE BLACK MUSIC 443 Liberty Road, Englewood, New Jersey 07631 GAMBI MUSIC, INC., 443 Liberty Road, Englewood, New Jersey 07631 Complaint 13