FILED: NEW YORK COUNTY CLERK 09/18/2015 11:02 PM INDEX NO. 654328/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/18/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x FRANK DARABONT, FERENC, INC., DARKWOODS : PRODUCTIONS, INC., and CREATIVE ARTISTS AGENCY, LLC, Plaintiffs, v. Index No. 654328/2013 (Bransten, J.) Motion Seq. No. 010 AMC NETWORK ENTERTAINMENT LLC, AMC FILM : HOLDINGS LLC, AMC NETWORKS INC., STU SEGALL PRODUCTIONS, INC. and DOES 1 THROUGH 10, Defendants. X Oral Argument Requested DEFENDANTS' MEMORANDUM OF LAW IN SUPPORT OF THEIR ORDER TO SHOW CAUSE TO DISMISS THE NEW CLAIMS IN PLAINTIFFS' FIRST AMENDED COMPLAINT KASOWITZ, BENSON, TORRES & FRIEDMAN LLP Marc E. Kasowitz (mkasowitz@kasowitz.com) Aaron H. Marks (amarks@kasowitz.com) 1633 Broadway New York, New York 10019 (212) 506-1700 John V. Berlinski (jberlinski@kasowitz.com) Mansi K. Shah (mshah@kasowitz.com) 2029 Century Park East, Suite 750 Los Angeles, California 90067 (424) 288-7900 Attorneys for Defendants for Defendants AMC Network AMC Network Entertainment LLC, AMC LLC, Film AMC Holdings Film LLC, Holdings LLC, AMC Networks Inc. Inc. and Stu and Segall Stu Productions, Segall Producti Inc.
Darabont, et al. v. AMC Network Entertainment 1,1,C Index No. 654328/2013 TABLE OF CONTENTS Page(s) PRELIMINARY STATEMENT 1 STATEMENT OF FACTS 3 A. Background 3 B. The First Amended Complaint 5 ARGUMENT 6 A. Darabont could not have vested in his final 2.5% under the Vesting Provision because he admits he was removed prior to the end of Season 2 7 B. Darabont did not vest in the additional 2.5% of contingent compensation pursuant to paragraph 3(a) of the 2011 Amendment because the FAC establishes that he did not render "full-time" services on all episodes of Season 2 9 C. Plaintiffs' new breach of contract allegations are severable from the First Amended Complaint and should be dismissed with prejudice 10 CONCLUSION 10
TABLE OF AUTHORITIES Cases Page(s) 150 Broadway NY Assocs. L.P. v. Bodner, 14 A.D.3d 1 (1st Dep't 2004) 7, 9 805 Third Ave. Co. v MW Realty Ass'n., 58 N.Y.2d 447 (1983) 7 Berkowitz v. Club Ventures Inv. LLC, 2008 NY Slip Op. 33105(U) (N.Y. Sup. Ct. Nov. 5, 2008) 7 Coastal Purch. Group, LLC v. JPMCC 2005-CIBC Collins Lodging, LLC, 120 A.D.3d 1382 (2d Dep't 2014) 6, 9 Deutsche Bank Nat'l Trust Co. v. Sinclair, 2009 N.Y. Slip Op 9419 (2d Dep't 2009) 6 Forse v. Turner, 55 Misc.2d 810 (2d Dep't 1968) 7 Mark Hampton, Inc. v. Bergreen, 173 A.D.2d 220 (1st Dep't 1991) 6 Myer v. Myer, 271 A.D. 465 (1st Dep't 1946) 7 N. Fork Pres., Inc. v. Kaplan, 31 A.D.3d 403 (2d Dep't 2006) 7 Nelson v. Capital Cardiology Assoc., P.C., 97 A.D.3d 1072 (3rd Dep't 2012) 7 Towbin v. Towbin, 117 A.D.3d 607 (1st Dep't 2014) 10 Wagner v. Azulay, 2015 NY Slip Op. 30230(U) (N.Y. Sup. Ct. Feb. 3, 2015) 7 Statutes CPLR 3211(a)(1) 1, 6, 7, 9, 11 CPLR 3211(a)(7) 1, 6, 9, 11 ii
Defendants AMC Network Entertainment LLC, AMC Film Holdings LLC ("AMC Studios"), AMC Networks Inc., and Stu Segall Productions, Inc. (collectively, "Defendants") submit this memorandum of law in support of their order to show cause to dismiss, pursuant to CPLR 3211(a)(1) and (a)(7), the new allegations in paragraphs 53-60, 63(E), 75, and 79 of plaintiffs' Frank Darabont, Ferenc, Inc., and Darkwoods Productions, Inc. (collectively, "Darabont") First Amended Complaint, filed August 19, 2015, (the "FAC") that Darabont is entitled to a greater percentage of contingent compensation.' PRELIMINARY STATEMENT Contracts are not screenplays. They cannot be unilaterally rewritten simply because one party dislikes the ending. Yet, that is precisely what plaintiff Frank Darabont, a screenwriter, attempts to accomplish by amending his Complaint in this action to allege that he is entitled to an additional five percentage points of contingent compensation beyond the more than ten percentage points he already receives. In particular, Darabont attempts to simply write out two key provisions of the parties' agreements: (1) paragraph 11 of Exhibit B to the 2010 Agreement (the "Removal Provision"); and (2) paragraph 13(c) of the 2010 Agreement (the "Vesting Provision"). These provisions, combined with Darabont's admissions throughout the FAC, flatly contradict his new claims and compel the dismissal of these new claims with prejudice. Darabont's claimed entitlement to a 5% additional share of "profits" from The Walking Dead (the "Series") rests on two independent allegations. First, he claims that he is entitled to an extra 2.5% under the Vesting Provision because that amount vested when he "rendered executive producer/showrunner services on all episodes produced during Season 2 of the Series." Regardless of whether he rendered such services, however, both the parties' agreements and the ' Submitted herewith in support to Defendants' Order to Show Cause is the Affirmation of Aaron H. Marks, dated September 18, 2015 ("Marks Aff."), with exhibits annexed thereto.
Page 2 of 11 allegations of the FAC make clear that this additional 2.5% only vests at the "conclusion of [the] second season of the Series." The Removal Provision, for its part, provides that Darabont's share of contingent compensation is limited to the vested amount as of the date he was terminated from the Series. Because Darabont admits in the FAC that he was terminated before Season 2 concluded, it is clear on the face of the 2010 Agreement that the additional 2.5% share of contingent compensation he now seeks by way of the FAC never vested, and this new claim must be dismissed. Second, Darabont alleges that he is entitled to yet another 2.5% of contingent compensation in connection with the Series pursuant to paragraph 3(a) of the 2011 Amendment, based on the same claim that he "rendered executive producer/showrunner services on all episodes produced during Season 2." The parties' agreements, however, required Darabont to perform Yull-time" lull-time" services on all episodes of Season 2 in order for him to vest in this additional 2.5%. (Marks Aff. 5, Ex. B., FAC 59 ("[T]he parties further agreed that if Darabont rendered full-time executive producer/showrunner services on all episodes of Season 2, the additional 2.5% of EP/Showrunner Profits would apply...") (emphasis added).) Darabont cannot state a claim for this additional 2.5% under paragraph 3(a) of the 2011 Amendment because he is unable to and therefore does not allege that he rendered the requisite "fulltime" services. To the contrary, the FAC establishes that Darabont did not render "full-time" services on Season 2 because it pleads that Darabont was removed from the Series in the middle of that season. All of Plaintiffs' claims in this lawsuit ultimately will be proven meritless, but, as demonstrated below, Darabont's new breach of contract claims alleging entitlement to an additional 5% of contingent participation should be dismissed now because they are flatly
Page 3 of 11 contradicted by the allegations of the FAC and the contracts attached hereto. Moreover, these claims should be dismissed with prejudice because Darabont cannot plead around his binding admissions and resuscitate these baseless claims. STATEMENT OF FACTS A. Background The television series The Walking Dead (the "Series") originates from a comic book series of the same name. Plaintiff Darabont, through his loan-out companies,2 plaintiffs Ferenc, Inc. and Darkwoods Productions, Inc. (collectively, "Darabont"), was hired by defendant Stu Segall Productions, Inc. to write, produce, and direct a television series based on this comic book. The parties' initial agreement is attached to the original Complaint as Exhibit A (the "2010 Agreement"). (See Marks Aff. 4, Ex. A, 2010 Agreement.) The 2010 Agreement was amended, effective January 10, 2011, by 'The Walking Dead'/Frank Darabont Season 2 Amendment," attached to the original Complaint as Exhibit B (the "2011 Amendment"). (See id., Ex. A, 2011 Amendment) While making reference to these attached documents in the FAC, Plaintiffs failed to attach them to their filing, so their original Complaint with exhibits is attached hereto alongside the FAC. (Id. III 4-6, Exs. A-B.) Pursuant to the 2010 Agreement and the 2011 Amendment (collectively, the "Agreements"), Darabont has been paid more than $2.6 million in guaranteed compensation. (Marks Aff. 4, Ex. A., 2010 Agreement IN 1(a), 2(a), 4(a)-(b), 6(c)(i)-(iv), 7, 8; 2011 Amendment 1(a).) The Agreements also entitle Darabont to contingent compensation the right to potentially receive a percentage of the Series' defined "gross receipts" after deduction of agreed upon fees, expenses, and other items. (Id., 2010 Agreement 13.) The maximum share of 2 A "loan-out" company is an entity that typically employs a single individual and furnishes his or her creative services to one or more studios.
Page 4 of 11 contingent compensation that Darabont can receive under the Agreements, if all conditions precedent are satisfied, is 15%. Defendant AMC Studios is currently paying Darabont between a 10% to an 11.875% share of contingent compensation, with him receiving the higher percentage in connection with episodes for which he rendered executive producer/showrunner services. The first 2.5% is based on the fact that he received a "sole 'Directed By' credit on the Pilot" episode of the Series. (Marks Aff. 1[4, Ex. A., 2010 Agreement 6(c)(v).) The next 7.5% is due to the Vesting Provision, which allows for a potential additional 10% to vest in four equal 2.5% shares "at each of the following events: (i) delivery to Company of Pilot rewrite; (ii) delivery of Pilot, provided that [Darabont] renders executive producing services on the Pilot; (iii) conclusion of first season of the Series, provided that [Darabont] renders executive producing services on all episodes produced during the production of the first season; and (iv) conclusion of the second season of the Series, provided that [Darabont] renders executive producing services on all episodes produced during the production of the second season." (Id., 2010 Agreement 13(c) (emphasis added).) The parties agree that the first three of these events occurred and that Darabont therefore vested in three-quarters, or 7.5%, of this extra 10%. It is this final quarter (i.e., 2.5%) of Darabont's contingent compensation that Darabont suddenly claims he is entitled to by way of his FAC and that Defendants hereby dispute. The Agreements provide AMC with a unilateral right to terminate Darabont from working on the Series without cause pursuant to the Removal Provision. If Defendants invoke this provision, their only future obligations to Darabont are to "pay [him] the guaranteed consideration and vested contingent compensation" due at the time of this termination. (Marks Aff. 4, Ex. A, 2010 Agreement Ex. A, 11 (emphasis added).) In their FAC, Plaintiffs
Page 5 of 11 expressly acknowledge that AMC exercised its contractual rights to remove Darabont from the Series pursuant to this Removal Provision, and that AMC exercised this right prior to the conclusion of the second season of the Series. (Marks Aff. 5, Ex. B, FAC 47.) The Agreements also provide for Darabont to receive a final potential 2.5% share (up to 15% total) applicable to only those episodes of the Series for which Darabont "render[ed] executive producer/showrunner services" still subject to the vesting requirements of paragraph 13(c). (Marks Aff. 4, Ex. A, 2010 Agreement 11 ItT 13(a), 13(c) (emphasis added).) If Darabont did not render executive producer/showrunner services for Season 2, he would only be entitled to only the vested share of that 2.5% applicable to the episodes on which he rendered those services. (See id., 2010 Agreement It 13(a).) B. The First Amended Complaint The FAC amends Plaintiffs' original Complaint in a number of respects, including by withdrawing their allegation that Defendants wrongfully terminated Darabont from the Series. For purposes of this motion, however, the key amendments concern new breach of contract claims in which Darabont alleges that he is entitled to: (1) an additional 2.5% of contingent compensation under the Vesting Provision; and (2) an additional 2.5% of contingent compensation under paragraph 3(a) of the 2011 Amendment. Specifically, Darabont alleges that defendant AMC Studios breached the Agreements "[b]y improperly reducing Darabont's share of Developed By Profits and EP/Showrunner Profits under Paragraph 13 of the Agreement and by failing to apply Darabont's EP/Showrunner Profits to all episodes produced during Season 2 and beyond." (Marks Aff. 5, Ex. B, FAC 63(E).) These new claims are contained in separate and distinct paragraphs of the breach of contract and declaratory relief claims in the FAC. (See id. IN TT 53-60, 63(E), 75, 79.)
Page 6 of 11 Plaintiffs have further pleaded in their FAC that Darabont was removed from the Series "in mid-production of Season 2," "[i]n the midst of a hectic shooting schedule for Season 2," and "shortly before Season 2 aired." (Marks Aff. 5, Ex. B, FAC TT 34, 44, 46.) Plaintiffs allege that some of the work Darabont performed prior to being removed from the Series "in late July [2011]" impacted "the balance of the second season." (Id. 55.) In addition, they have pleaded that Darabont rendered full-time executive producer/showrunner services for a "substantial part" but not all of the second season. (Id. 21.) Darabont also failed to plead that he rendered the requisite "full-time executive producer/showrunner services on all episodes of Season 2" under paragraph 3(a) of the 2011 Amendment. (See id, IN 21, 59; Marks Aff. 4, Ex. A, 2011 Amendment 3(a).) ARGUMENT Under CPLR 3211(a)(1) and (a)(7), a motion to dismiss should be granted where the allegations of a complaint are contradicted by documentary evidence or a complaint does not state facts sufficient to support a cause of action. "[F]actual allegations which are flatly contradicted by the record are not presumed to be true and, if the documentary proof disproves an essential allegation of the complaint, dismissal pursuant to CPLR 3211(a)(7) is warranted even if the allegations, standing alone, could withstand a motion to dismiss for failure to state a cause of action." Coastal Purch. Group, LLC v. JPMCC 2005-CIBC Collins Lodging, LLC, 120 A.D.3d 1382, 1385 (2d Dep't 2014) (quoting Deutsche Bank Nat'l Trust Co. v. Sinclair, 2009 N.Y. Slip Op 9419, at* 2 (2d Dep't 2009)) (internal quotation and citations omitted); see also Mark Hampton, Inc. v. Bergreen, 173 A.D.2d 220 (1st Dep't 1991) (stating that "factual claims either inherently incredible or flatly contradicted by documentary evidence" are not to be presumed true). Similarly, dismissal under CPLR 3211(a)(1) is required where the underlying
Page 7 of 11 contracts "unambiguously contradict[] the allegations supporting a litigant's cause of action for breach of contract... regardless of any extrinsic evidence or self-serving allegations offered by the proponent of the claim." 150 Broadway NY Assocs. L.P. v. Bodner, 14 A.D.3d 1, 5 (1st Dep't 2004); see also 805 Third Ave. Co. v MW Realty Ass 'n., 58 N.Y.2d 447, 451 (1983). Motions to dismiss are properly directed to portions of a cause of action where the acts complained of are set forth separately within such causes of action. See Myer v. Myer, 271 A.D. 465, 476 (1st Dep't 1946) ("Although the present complaint contains but one cause of action, the various acts complained of are set forth in separately designated paragraphs."); Forse v. Turner, 55 Misc.2d 810, 812 (2d Dep't 1968) (dismissing single specification of negligence that was severable though not stated as a separate cause of action); see also N. Fork Pres., Inc. v. Kaplan, 31 A.D.3d 403, 405 (2d Dep't 2006) (dismissing parts of a cause of action that were "flatly contradicted by the documentary evidence in the record"); Nelson v. Capital Cardiology Assoc., P.C., 97 A.D.3d 1072, 1073-74 (3rd Dep't 2012) (dismissing portion of breach of contract claim). Moreover, courts have the authority to dismiss new causes of action in an amended complaint even if no motion to dismiss was filed to the original complaint. See Wagner v. Azulay, 2015 NY Slip Op. 30230(U) (N.Y. Sup. Ct. Feb. 3, 2015) (granting motion to dismiss new causes of action in amended complaint where defendant had answered original complaint); see also Berkowitz v. Club Ventures Inv. LLC, 2008 NY Slip Op. 33105(U) (N.Y. Sup. Ct. Nov. 5, 2008) (finding no support for argument that, because defendant interposed an answer to the original complaint, it was required to answer rather than move to dismiss the amended complaint). A. Darabont could not have vested in his final 2.5% under the Vesting Provision because he admits he was removed prior to the end of Season 2. With respect to the Vesting Provision, Plaintiffs allege that Darabont "rendered executive
Page 8 of 11 producer/showrunner services on all episodes produced during Season 2 of the Series," and as such, he is entitled to an "additional 2.5% of EP/Showrunner Profits, fully vested, for all 13 episodes produced during Season 2." (Marks Aff. 5, Ex. B, FAC 58.) However, as much as Plaintiffs wax poetic about the purported hard work that Darabont put into various episodes of Season 2, none of their allegations can change the facts that, under the plain language of the Agreements, (1) Darabont could not have vested in this 2.5% share of contingent compensation until after the "conclusion of [the] second season of the Series," and (2) defendant AMC Studios removed him from the Series prior to the occurrence of that event. (See Marks Aff. 4, Ex. A, 2010 Agreement 13(c)(iv); Marks Aff. 5, Ex. B, FAC 34, 54.) Plaintiffs admit as much in the FAC. Specifically, they plead that defendant "AMC exercised its contractual 'pay or play' right to remove Darabont from the Series," meaning that AMC was "obligated only to pay [Darabont his] guaranteed consideration and vested contingent compensation" as of that date. (Marks Aff. 4115, Ex. Ex. B, B, FAC 1147 (emphasis added).) Moreover, Plaintiffs admit in the FAC that Darabont was removed from the Series "on July 27, 2011," "in mid-production of Season 2," "[i]n the midst of a hectic shooting schedule for Season 2," and "before Season 2 aired." (Id. IN 34, 44, 46 (emphasis added).) Plaintiffs further allege that some of the work Darabont performed prior to being removed from the Series "in late July" impacted "the balance of the second season." (Id. 55.) It is therefore clear from the FAC that Season 2 of the Series was still underway when Darabont was removed, and therefore Darabont could not have vested in the final 2.5% of contingent compensation under the Vesting Provision. (See Marks Aff. 4, Ex. A, 2010 Agreement 13(c)(iv)); id. 115, Ex. B, FAC 54 (Darabont "become[s] 100% vested at the `conclusion of [the] second season of the Series..." (emphasis added).) Because the FAC
Page 9 of 11 conclusively disproves Darabont's allegations that he is entitled to this additional 2.5%, Plaintiffs cannot state facts sufficient to support this new breach of contract claim, and it must therefore be dismissed. See Coastal Purch. Group, LLC, 120 A.D.3d at 1385 (dismissing claim under CPLR 3211(a)(1) and (7) because documentary evidence "refuted the allegations in the complaint."); 150 Broadway NY Assocs. L.P., 14 A.D.3d at 5 (reversing denial of motion to dismiss because contract terms were dispositive). B. Darabont did not vest in the additional 2.5% of contingent compensation pursuant to paragraph 3(a) of the 2011 Amendment because the FAC establishes that he did not render "full-time" services on all episodes of Season 2. Plaintiffs also contend that Darabont is entitled to an additional 2.5% of contingent compensation under paragraph 3(a) of the 2011 Amendment, however, those allegations too are contradicted by the plain language of the FAC. As Plaintiffs note in their FAC, a condition precedent for Darabont to receive this additional 2.5% is that Darabont render 'full-time executive producer/showrunner services on all episodes of Season 2." (Marks Aff. 5, Ex. B, FAC 59 (emphasis added).) But Plaintiffs do not allege that Darabont satisfied this "full-time" standard, because they cannot. As explained above, Plaintiffs have alleged in no uncertain terms that Darabont was removed from the Series pursuant to the Removal Provision in the middle of Season 2; therefore he cannot have rendered "full-time executive producer/showrunner services" for those episodes of Season 2 that occurred after he was removed. (See id. 21, 34, 44, 46.) This is why the FAC alleges only that Darabont rendered full-time executive producer/showrunner services on Season 2 "until Defendants removed Darabont from the Series at the end of July 2011," "in mid-production of Season 2." (Id. rif 34, 59.) There is nothing in the Agreements that provides any exceptions to the "full-time executive producer/showrunner services on all episodes" requirement, and it is clear from the face of the FAC that Darabont has
Page 10 of 11 failed to satisfy this condition and is not entitled to the 2.5% of additional contingent compensation that Plaintiffs have attempted to add to their breach of contract claim. (See id. II] 41111 21, 34, 44, 46, 59, 63(E); see generally Marks Aff. 4, Ex. A, 2010 Agreement, 2011 Amendment.) This baseless new allegation must therefore be dismissed as well. C. Plaintiffs' new breach of contract allegations are severable from the First Amended Complaint and should be dismissed with prejudice. Plaintiffs' new allegations alleging entitlement to an additional 5% share of contingent compensation are appropriate for dismissal because they are easily severable from the remainder of their breach of contract and declaratory relief claims. (See Marks Aff. 5, Ex. B, FAC 53-60, 63(E), 75, 79.) Indeed, these allegations are contained in separate paragraphs of the FAC, and they concern distinct remedies from the remainder of the FAC, i.e., Darabont's purported entitlement to an increased share of contingent compensation based on the language of standalone provisions in the Agreements. The fact that this claim was not even included in the original Complaint is further evidence of its ability to be severed and treated independently from Plaintiffs' other breach of contract and declaratory relief claims for purposes of this motion. See, e.g., Myer, 271 A.D. at 476; see Marks Aff. 5, Ex. B, FAC 53-60, 63(E), 75, 79.] Furthermore, because the contradicting documentary evidence flatly precludes the possibility that Plaintiffs could amend this new breach of contract claim to address its many defects, this claim should be dismissed with prejudice. See Towbin v. Towbin, 117 A.D.3d 607, 608 (1st Dep't 2014) (affirming dismissal with prejudice based on documentary evidence). CONCLUSION For the foregoing reasons, Defendants respectfully request that this Court grant their order to show cause to dismiss, pursuant to CPLR 3211(a)(1) and (a)(7), Darabont's new allegations in paragraphs 53-60, 63(E), 75, and 79 of the FAC that he is entitled to an additional
Page 11 of 11 5% share of contingent compensation in connection with the Series, and order the dismissal of these allegations with prejudice and such other and further relief as the Court deems just and proper. Dated: September 18, 2015 New York, New York KASOWITZ, BENSON, TORRES & FRIEDMAN LLP By: Marc E. Kasowitz (mkasowitz@kasowitz.corn) (mkasowitz@kasowitz.com) Aaron H. Marks (amarks@kasowitz.com) 1633 Broadway New York, New York 10019 (212) 506-1700 John V. Berlinski (jberlinski@kasowitz.com) Mansi K. Shah (mshah@kasowitz.com) 2029 Century Park East, Suite 750 Los Angeles, California 90067 (424) 288-7900 Attorneys for Defendants AMC Network Entertainment LLC, AMC Film Holdings LLC, AMC Networks Inc. and Stu Segall Productions, Inc.