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ContractsSony Music Entertainment, Inc. v. Werre, 601441/09Supreme Court, New York CountyJustice Bernard FriedDecided: March 23

APPEARANCES:

For Plainti: Dechert LLP, New York, New York (Ben-jamin E. Rosenberg, Robert W. Topp)

For Deendant EMI Music North America: SidleyAustin LLP, New York, New York (John G. Hutchinson,

Martin B. Jackson)For Deendant Ronn Werre: Herrick, Feinstein LLP,

New York, New York (Mara B. Levin, David Feuerstein)

In motion sequences 001 and 002, respectively, deendantEMI Music North America (EMI) and deendant Ronn

Werre (Werre) move to dismiss the complaint as againstthem, pursuant to CPLR 3211 (a) (1) and (a) (7).

Werre has been a high-level executive employee o EMIsince 1998. In early 2009, Werre entered into negotiationswith Sony about his joining Sony ater his contract withEMI ended. Sony states that, during the negotiations,Werre inormed Sony that he had a written employmentagreement with EMI that expired on March 31, 2010 andthat did not contain a non-compete clause or any otherrestrictive covenant that would prevent him rom workingor Sony upon the conclusion o his contract term at EMI.

Cmplt, 5. On February 12, 2009, Werre and Sony signeda letter agreement entitled Employment Agreement Aso April 1, 2010 (the Letter Agreement).

A ew months ater signing the Letter Agreement, Werrere-signed an employment contract with EMI, therebyextending the term o his employment with EMI throughApril 1, 2010 and beyond. Sony then commenced theinstant lawsuit. The complaint contains our causes oaction. The rst three causes o action, sounding in breacho contract, raud and breach o the duty o good aithand air dealing, are brought as against Werre. The ourthcause o action, brought as against EMI, alleges tortiousintererence with contract.

Paragraph 2 o the Letter Agreement states, in part:

Provided that prior to the commencement o theTerm hereo (as dened in Paragraph 4 herein) youwill not be under any written or oral agreement, nor

will you have at any time entered into an agreement,non-competition covenant, or any similar agreement,covenant, understanding, or restriction, with anyother person, rm, company or corporation, whichwould in any manner preclude or prevent you romgiving reely, and [Sony] receiving, the exclusivebenets o your services as outlined in Paragraph3 herein, [Sony] hereby oers you employment asPresident, Commercial Music Group, [Sony], andyou accept such employment, subject to the termsand conditions o this Agreement.

The Term o the Letter Agreement is set orth inparagraph 4 to be three (3) years, and shall commenceApril 1, 2010 provided that the conditions set orth inParagraph 2 above have been satised, and end on March31, 2013, with Sony permitted to terminate beore theend o the Term under certain conditions.

Paragraph 25 o the Letter Agreement states:

Representation: This Agreement has been oeredto you based on your representation that as o thecommencement o your employment with [Sony]and throughout the Term, you will not be underany written or oral agreement, nor will you have atany time entered into an agreement, noncompetitioncovenant, nondisclosure agreement, or any similaragreement, covenant, understanding, or restriction,with any other person, rm, or corporation, whichwould or could in any manner preclude or preventyou rom giving reely, and [Sony] receiving, theexclusive benets o your services.

Deendants assert that the Letter Agreement is acontingent oer, subject to the condition that Werre isavailable or employment on April 1, 2010. They argue

that, because the contingency did not occur, there is nobinding contract between Werre and Sony, and the LetterAgreement is thereore not enorceable.

EMI argues that it could not have tortiously intereredwith the Letter Agreement because it is not a bindingcontract. EMI urther contends that it had the exclusiveright to enter into an employment agreement with Werreduring the term o his employment with EMI, because hecould not enter into a binding agreement with any otheremployer while he was employed by EMI.

EMI contends that Werres employment agreement withEMI prohibited him rom directly or indirectly acceptingemployment rom any other party while he was employedat EMI, and rom being connected with any other entityin the business o music publishing, record productionor artist management. Thus, according to EMI, any bind-ing agreement between Werre and Sony entered intoprior to April 1, 2010 would be unenorceable, becauseit would violate the restrictions in Werres pre-existingemployment contract with EMI.

Werre argues that Sony was aware o the restrictionsin his prior employment agreement with EMI and knewthat he could not, as o February 2009, commit himselto work or Sony as o April 1, 2010. According to Werre,he thereore negotiated with Sony in good aith that, i hedid not re-sign with EMI, and he was available on April 1,2010, he would commence employment with Sony as othat date. Deendants argue that the Letter Agreement didnot restrict Werre or EMI rom extending the pre-existingemployment relationship between them.

Sony argues that the prevention doctrine applies, underwhich, a party to a contract cannot undermine a condi-tion precedent set orth within the contract. According toSony, the Letter Agreement is a binding contract betweenSony and Werre, in that there is an oer and an accep-tance, which are not contingent. Sony argues that theperormance under the contract is contingent, but thatthat is true or all contracts or uture perormance.

Sony urther asserts that paragraph 25 o the LetterAgreement expressly states that Werre would not enterinto a contract that would restrict his ability to perormunder the Letter Agreement. Sony argues that paragraph25 o the Letter Agreement makes it clear that Werre wasnot to enter into another employment agreement thatwould eviscerate his contract with Sony.

Deendants assert that paragraph 25 o the Letter Agree-ment only comes into existence as a binding commitmenti Werre commences employment with Sony, and is onlyapplicable during the term o any employment with Sony.According to deendants, it does not apply i Werre nevercommences employment with Sony.

Deendants contend that Sony could have made para-graph 25 eective on the date the Letter Agreement wassigned, or even as o April 1, 2010. Instead, it becomesoperative only as o the commencement o [Werres]employment with [Sony]. Deendants argue that thisprecludes any claim that Werre breached the LetterAgreement by accepting continued employment romEMI beore April 1, 2010.

Werre argues that Sonys breach o contract claimagainst him is insucient and contrary to the terms othe contingent oer set orth in the Letter Agreement.According to Werre, the contingent oer is no longer ineect because Werre is now under an employment agree-ment with EMI that extends beyond April 1, 2010. Werreasserts that, because the contingency o his availabilityon April 1, 2010 did not occur, there is no agreement withSony and nothing to breach.

Werre maintains that Sonys raud claim also ailsbecause it is based solely on the allegation that Werredid not intend to perorm under the agreement at thetime the parties agreed to the terms o the oer, andbecause it contradicts the express terms o the LetterAgreement. Werre asserts that the claim or breach ogood aith and air dealing ails because it improperlyseeks to alter the express terms o the Sony oer, andbecause it is based upon the same fawed actual premiseunderlying Sonys breach o contract claim.

In assessing the adequacy o a complaint on a motionto dismiss pursuant to CPLR 3211 (a) (7), the court must

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construe the allegations therein liberally, giving plaintithe benet o all avorable inerences. Leon v. Martinez,84 NY2d 83 (1994). Allegations that consist o bare legalconclusions, and claims that are contradicted by docu-mentary evidence, however, are not entitled to such apresumption. Caniglia v. Chicago Tribune-N.Y. News Syn-dicate, 204 AD2d 233, 233-34 (1st Dept 1994). On a motionto dismiss pursuant to CPLR 3211 (a) (1), dismissal isgranted only i the documentary evidence submittedconclusively establishes a deense to the asserted claimsas a matter o law. Leon v. Martinez, 84 NY2d at 88.

Werres motion to dismiss is granted. The Letter Agree-ment is not a binding, enorceable contract because thecontingency set orth in paragraph 2 therein, namelyWerres availability or employment on April 1, 2010, didnot occur. Thus, the terms o the Letter Agreement didnot and will not become binding. Sonys argument thatWerre breached paragraph 25 is unpersuasive. The termso that provision indicate that it does not come into eectuntil the commencement o [Werres] employment.Such commencement o employment never took place,so Werre could not have breached paragraph 25.

The prevention doctrine does not apply. At bottom,the application o this doctrine rests on an implied obli-gation under the contract not to rustrate or prevent theperormance o the condition precedent. HGCD RetailServs., LLC v. 44-45 Broadway Realty Co., 37 AD3d 43,53 (1st Dept 2006). That general rule, however, applieswhen there is a binding contract in eect that containsthe condition precedent in question, which is not thesituation here.

In the instant case, by contrast, the contract is not bind-ing on the parties until the condition precedent occurs,such that the prevention doctrine does not apply.

Most conditions precedent describe acts or eventswhich must occur beore a party is obliged to perorma promise made pursuant to an existing contract,a situation to be distinguished conceptually rom acondition precedent to the ormation or existence othe contract itsel. In the latter situation, no contractarises unless and until the condition occurs.

Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co.,86 NY2d 685, 690 (1995) (internal citations and quotationmarks omitted).

The raud claim is based on the allegation that Werrenever intended to be bound by the Letter Agreement,

but rather sought to use the Letter Agreement as lever-age with EMI, so that he could enter into a more gener-ous contract with EMI than he otherwise would havereceived. Cmplt, 19. The complaint urther alleges thatWerre misrepresented to Sony that he was interested inemployment with Sony and that he intended to perormunder the Letter Agreement. Id., 20.

The raud claim is dismissed. A raud claim that onlyrestates a breach o contract claim may not be main-tained. Orix Credit Alliance v. Hable Co., 256 AD2d 114,115 (1st Dept 1998). Allegations that a party enteredinto a contract without intent to perorm do not state acause o action or raud. Id.

The third cause o action, sounding in breach o thecovenant o good aith and air dealing, is also dismissed,as it is duplicative o the breach o contract claim, in thatthey both arise rom the same acts. See Logan Advi-

sors, LLC v. Patriarch Partners, LLC, 63 AD3d 440, 443(1st Dept 2009).

EMIs motion to dismiss is also granted. The elementso a claim or tortious intererence with a contract are:(1) a valid contract between plainti and a third party,(2) deendants knowledge o the contract, (3) deen-dants unjustied, deliberate inducement o the thirdpartys breach o the contract, (4) actual breach o thecontract, and (5) damages resulting rom the breach.Lama Holding Co. v. Smith Barney, 88 NY2d 413, 424(1996). The Letter Agreement is not a valid, enorceablecontract, due to the non-occurrence o the contingencycontained therein. Thus, the rst element o a tortiousintererence claim is not satised, and the ourth causeo action is dismissed.

Accordingly, it is

ORDERED that deendant EMI Music North Americasmotion to dismiss, motion sequence 001, is granted andthe complaint is dismissed as against said deendantwith costs and disbursements to deendant as taxed bythe Clerk o the Court; and it is urther

ORDERED that deendant Ronn Werres motion to dis-miss, motion sequence 002, is granted and the complaintis dismissed as against said deendant with costs anddisbursements to deendant as taxed by the Clerk o theCourt; and it is urther

ORDERED that the Clerk is directed to enter judgmentaccordingly.