`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 1 of 18
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`',' i
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`USDCSDNY
`DOCUMENT
`UNITED STATES DISTRICT COURT
`.: I ELECTRONICALLY FILED
`SOUTHERN DISTRICT OF NEW YORK
`---------------------------------------------------------------------- X :. DOC #'
`:
`DATE FILED:lSEP.2 6 201~,
`PARAMOUNT PICTURES CORPORATION,
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`.
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`. ' .
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`' .
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`Plaintiff and Counterclaim Defendant,
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`-v-
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`ANTHONY PUZO, as executor of the Estate of Mario
`Puzo,
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`Defendant and Counterclaim Plaintiff.
`----------------------------------------------------------------------X
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`ALISON J. NATHAN, District Judge:
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`12 Civ. 1268 (AJN)
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`ORDER & OPINION
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`Paramount Pictures Corporation ("Paramount") initiated this action against the Estate of
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`Mario Puzo ("the Estate"), seeking declaratory relief and damages for alleged ongoing and
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`prospective violations of the federal Copyright Act, 17 U.S.C. § 101 et seq., and of the federal
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`trademark laws, 15 U.S.C. §§ 1114 and 1125(a), as a result of the Estate's creation and
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`publication of sequels to The Godfather. The Estate denies liability and counterclaims for breach
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`of contract and tortious interference and seeks cancellation or, in the alternative, rescission of the
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`contract with Paramount.
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`Before the Court is Paramount's motion to dismiss the Estate's counterclaims pursuant to
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`Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Not immediately before the
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`Court in the instant motion - and therefore not decided in this opinion - is the underlying
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`question of whether the Estate or Paramount owns the book publishing rights to any sequels to
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`The Godfather. The Court denies Paramount's motion to the dismiss the Estate's breach of
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`contract counterclaim. As to all other counterclaims, Paramount's motion to dismiss is granted.
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`1
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 2 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 2 of 18
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`I. LEGAL STANDARD
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`When deciding a motion to dismiss for failure to state a claim pursuant to Federal Rule of
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`Civil Procedure 12(b)(6), the Court must accept as true all well-pleaded facts and draw all
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`reasonable inferences in the light most favorable to the non-moving party. See Kassner v. 2nd
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`Ave. Delicatessen, Inc., 496 F.3d 229,237 (2d Cir. 2007). To survive a motion to dismiss, the
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`counterclaimant's pleading must contain sufficient factual matter, accepted as true, to "state a
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`claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1960 (2009)
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`(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In addition to the allegations of
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`the pleading itself, the Court may consider documents attached as exhibits or incorporated by
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`reference. Halebian v. Berv, 644 F.3d 122, 131, n.7 (2d Cir. 2011); Chapman v. NY State Div.
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`for Youth, 546 F.3d 230, 234 (2d Cir. 2008). Any facts relied upon in this opinion are drawn
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`from the Estate's counterclaim pleading and from documents referenced in and integral to that
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`pleading.
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`II.
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`FACTS
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`In 1969, Paramount purchased from Mario Puzo ("Puzo") certain rights in Puzo's novel
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`The Godfather. (Am Cntrclm. ~ 2) By written agreement (the "1969 Agreement"), Puzo granted
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`to Paramount "any and all copyrights therein and all rights now known or hereafter accruing
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`therein and thereto, forever and throughout the world, together with the sole and exclusive right
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`to use said work, in whole or in part, in whatever manner the Purchaser [i.e., Paramount] may
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`desire, including, but not limited to, the sole and exclusive right: to make and cause to be made
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`literary and dramatic and other versions and adaptations of every kind and character of said work
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`or any part or parts thereof and/or any or all of the characters created therein ... [and] to adapt,
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`arrange, change, interpolate in, transpose, add to and subtract from said work to such extent as
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`2
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 3 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 3 of 18
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`the Purchaser, in its sole discretion, may desire in connection with any use which the Purchaser
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`may make of said work ... [and] to use any or all ofthe characters created therein and said titles
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`or any simulations thereof in connection with any other works, whether or not the same are based
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`upon or adapted from said work or any part or parts thereof .... " (Daum Decl. Ex. A and B)
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`Central to the dispute, however, is language that was struck from the 1969 Agreement.
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`The stricken language would have granted Paramount the right to "publish said work and/or any
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`versions or adaptations thereof, or any part or parts thereof, and to vend copies thereof." (Id.)
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`The parties contest the meaning and significance of the stricken language. Paramount contends
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`that "this language was stricken from the contract and grant of copyright because Puzo had
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`already published the novel entitled The Godfather and that, aside from the limited right to
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`publish the original The Godfather novel and versions (for example, trade paperbacks, mass(cid:173)
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`market paperbacks, or large-type editions) or adaptations (for example, audiobooks) of that
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`original novel, Puzo retained no other rights in The Godfather." (Am. Cmplt. ~ 3) By contrast,
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`the Estate argues that the striking of this language had the effect of reserving all book publishing
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`rights in Puzo. (Am. Cntrclm. ~ 2) According to the Estate, the reserved rights "were intended
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`to include book publishing rights in all parts and elements of The Godfather such as its
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`characters and, inter alia, book publishing rights in any book depicting characters that were
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`'part' of The Godfather in new and different situations, i. e., sequels." (Id.)
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`The instant action was precipitated by the Estate's intended publication of a prequel to
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`The Godfather - a book entitled The Family Corfeone. (Am. Cntrclm. ~ 11) The Estate alleges
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`that, as a result of this intended publication, "[s]tarting in December 2011 and continuing
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`thereafter in 2012, Paramount asserted to the Estate, contrary to the 1969 Agreement and the
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`parties' course of conduct during Puzo' s lifetime, that Paramount was automatically the
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`3
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 4 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 4 of 18
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`exclusive owner of all book publishing rights in any sequel to The Godfather, even if written by
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`Puzo without any contract with, or payment from, Paramount, or written by an author
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`commissioned and paid by the Puzo Estate, and that neither Puzo, nor the Puzo Estate, nor any
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`publisher had any such rights or any right to publish The Family Corleone or any other book that
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`is a sequel to The Godfather." (Am. Cntrclm. ~ 13.a.)
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`The Estate also alleges that Paramount told "the companies that had agreed to publish
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`The Family Corleone (the "Publishers") that neither the Publishers nor the Estate had any right to
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`publish The Family Corleone, and that, if they published that book, as Paramount knew the
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`Publishing Contracts required, they would be violating Paramount's rights and would incur
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`substantial liability to Paramount." (Am. Cntrclm. ~ 13.b.) As a result, "the Publishers would
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`not publish The Family Corle one, unless Paramount first provided its consent to that
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`publication." (Id.) The Estate characterizes this as "a condition to the exercise of the Puzo
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`Estate's rights under the 1969 Agreement that was not contained in those contracts and that
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`neither Paramount nor the Publishers had the right to impose on the Puzo Estate." (Id.)
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`According to the Estate, Paramount also "refused to provide the required consent to
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`publication of The Family Corleone, which had been made a condition to the publication, unless
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`the Estate paid into an escrow all funds theretofore or thereafter paid to the Puzo Estate by the
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`Publishers in respect of The Family Corleone." (Id.) The Estate similarly describes this as "an
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`obligation that was not in the 1969 Agreement, and [that] neither Paramount nor the Publishers
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`had any right to impose." (Id.) Publication of The Family Corle one did in fact go forward
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`following execution of an Interim Settlement Agreement which contained, inter alia, the
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`requirement that funds received by the Estate from the Publishers be placed into escrow. (Daum
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`Decl. Ex. C; Am. Cntrclm. ~~ 13.b., 27)
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`4
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 5 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 5 of 18
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`Finally, Paramount asserted to the Estate that Paramount "was automatically the
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`exclusive owner of all motion picture rights in The Family Corleone and in all books that are
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`sequels to The Godfather, including all the original, new characters and original, new story
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`material in such sequels not commissioned or paid for by Paramount but written by Puzo or by
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`authors commissioned and paid by his Estate with no Paramount contract or payment." (Am.
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`Cntrclm. ~ 13.c.)
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`Paramount initiated this action for declaratory relief and damages for copyright and
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`trademark violations. The Estate counterclaims and argues that Paramount's acts, detailed
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`above, constitute a material breach and repudiation of the 1969 Agreement supporting an action
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`not only for breach of contract but also for prospective cancellation or, in the alternative,
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`rescission. (Am. Cntrclm. ~~ 19, 22, 24) The Estate also argues that by asserting to the
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`Publishers that neither they nor the Estate had the right to publish The Family Corleone absent
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`Paramount's consent, and by conditioning its consent on the Estate placing into escrow all
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`monies received from the Publishers for The Family Corleone, Paramount tortiously interfered
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`with the Estate's publishing contracts. (Am. Cntrclm. ~ 27)
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`III. DISCUSSION
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`Paramount moves to dismiss each of the Estate's counterclaims. As to the Estate's claim
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`for breach of contract, Paramount moves for dismissal on the grounds of copyright preemption.
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`The Estate seeks to vindicate a right that, if it exists, arises out of the 1969 Agreement and not
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`out of federal copyright law. Consequently, for the reasons discussed below, the Court finds that
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`the Estate's breach of contract claim is not preempted and therefore denies Paramount's motion
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`to dismiss as to this claim. With respect to the Estate's counterclaims for cancellation,
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`rescission, and tortious interference, Paramount moves for dismissal arguing that these claims are
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`5
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 6 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 6 of 18
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`both insufficiently pled and preempted by the Copyright Act. As outlined below, the Court
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`agrees that these claims must be dismissed as insufficiently pled, and therefore does not reach the
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`question of preemption as to these claims.
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`A. The Estate's Breach of Contract Claim
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`Paramount moves to dismiss the Estate's breach of contract claim as preempted by the
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`Copyright Act. Before reaching the issue of preemption, clarification of the basis for the Estate's
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`breach of contract claim is necessary.
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`1.
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`The Estate's Breach of Contract Claim Is Founded On The Implied
`Covenant of Good Faith And Fair Dealing
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`The 1969 Agreement is, at base, the sale by Puzo of certain copyrights to Paramount.
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`Whether book publishing rights to all sequels were among the rights sold by Puzo to Paramount
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`is, of course, the ultimate issue underlying Paramount's copyright infringement claims and one
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`that both parties agree is not before the Court on Paramount's motion to dismiss. Assuming, as
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`the Estate alleges, that these rights were not sold to Paramount and that the language stricken
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`from the 1969 Agreement constitutes a reservation of all book publishing rights in Puzo, (Am.
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`Cntrclm. ~ 2), the Court must determine what attendant contractual obligation Paramount is
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`alleged to have repudiated or failed to perform.
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`The Estate alleges that Paramount repudiated and actually breached the 1969 Agreement
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`by asserting rights not afforded it under the contract (i. e., exclusive ownership of all book
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`publishing rights in any sequel to The Godfather), by disavowing rights reserved in the Estate
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`under the contract U. e., book publishing rights in any sequel to The Godfather), and by imposing
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`conditions not contained in the 1969 Agreement on the Estate's exercise of its publishing rights
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`(i. e., receipt of Paramount's permission prior to publishing The Family Corfeone and paying into
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`escrow all funds generated by such publication). (Am. Cntrclm. ~~ 13.a-b). In essence, the
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 7 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 7 of 18
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`Estate begins its analysis with its proposed contract interpretation proposition-that it reserved
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`for itself rather than transferred to Paramount the book publication rights to all sequels to The
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`Godfather - and then reasons from this interpretive proposition that all actions taken by
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`Paramount counter to this position - for example, Paramount's assertion of its view that the book
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`publication rights were not reserved by the Estate - constitute a material breach and repudiation
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`of the contract.
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`Contrary to the Estate's assertions, "[a] statement disavowing a party's rights under a
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`contract," "the erroneous claim to a right not given by the contract," or "an untenable
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`interpretation of a parties' [sic] contractual rights or duties," (Opp. 13), is not, in and of itself, a
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`repudiation. Rather, under New York law, such conduct constitutes repudiation only if it is done
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`to avoid a contractual obligation or if it is paired with a refusal to perform a contractual
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`obligation. That is, repudiation occurs when a party advances an untenable contract
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`interpretation to avoid its contractual obligations or when it refuses to perform its contractual
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`obligations absent the other party's satisfaction of extracontractual conditions. See In re Best
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`Payphones, Inc., 450 Fed. Appx. 8, at *2 (2d Cir. Nov. 23, 2011) (quoting SPI Comm. v. WTZA(cid:173)
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`TV Assoc. Ltd. P'ship, 644 N.Y.S.2d 788, 790 (3d Dep't 1996».
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`Indeed, none of the cases cited by the Estate support the proposition that the advancement
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`of a particular contract interpretation, if not done to avoid performance, amounts to repudiation.
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`(Opp. 13) Instead, these cases confirm that to constitute repUdiation, such conduct must be
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`paired with an effort to escape performance of a contractual obligation. See Palazzetti
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`Import/Export, Inc. v. Morson, 2001 WL 1568317, at *9 (S.D.N.Y. Dec. 06,2001) (refusal to
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`perform based on unwarranted interpretation of the contract can constitute repudiation) (citing
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`SP I Comm., 644 N. Y.S.2d at 790); Record Club of Am. v. United Artists Records, Inc., 643
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 8 of 18
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`F.Supp. 925,939 (S.D.N.Y. 1986) (refusal to perform based on erroneous contract interpretation
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`can constitute repudiation); Morgan v. McCaffrey, 789 N.Y.S.2d 274,276 (2d Dep't 2005) (a
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`party who refused to perform unless the other party conceded to its untenable interpretation of
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`the contract had anticipatorily repudiated the contract) (citing IBM Credit Fin. Corp. v. Mazda
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`Motor Mfg. (USA) Corp., 92 N.Y.2d 989 (3d Dep't. 1998), which explicitly held that "untenable
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`interpretation of a key contractual provision, and refusal to perform otherwise, constituted an
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`anticipatory breach of the contract." 92 N.Y.2d at 993 (emphasis added)); Hampton v. Dist.
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`Council, 411 N.Y.S.2d 124,127 (N.Y. Civ. Ct. 1978) (health benefits plan repudiated health
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`benefits contract where it advanced untenable contract interpretation in an attempt to avoid
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`covering plaintiff's dental care).
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`Thus, the question remains, what contractual obligation is Paramount alleged to have
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`attempted to avoid, refused to perform, or, in the case of actual breach, failed to perform? As
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`Paramount notes in its Reply, its only express obligations under the contract were to pay Puzo
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`$50,000 plus a possible additional $25,000 depending on sales of The Godfather novel and to
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`credit Puzo in the event a film was produced based on the copyright grant. (Daum Decl. Ex. A
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`~~ 7(b), 9; Reply 4) Even accepting the Estate's position that the language stricken from the
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`1969 Agreement indicates a reservation of book publishing rights in Puzo, the Estate can point to
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`no express contractual provision in which Paramount agreed to refrain from litigation or from
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`contesting the Estate's interpretation of the rights granted and reserved under the contract. There
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`is not, for example, an express covenant not to sue or otherwise interfere with each side's granted
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`and reserved rights. Instead, the Estate asserts that the obligation Paramount attempted to avoid,
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`refused to perform, and actually failed to perform is its obligation, arising out of the implied
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 9 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 9 of 18
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`covenant of good faith and fair dealing, not to interfere with the book publishing rights reserved
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`in Puzo. (Am. Cntrclm. ~ 13)
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`Under New York law, the implied covenant of good faith and fair dealing inheres in
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`every contract and obligates contracting parties to refrain from conduct that would "destro[y] or
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`injur[e] the right of the other party to receive the fruits of the contract." Dalton v. Educ. Testing
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`Serv., 87 N.Y.2d 384,389 (1995). Because Paramount does not move to dismiss the Estate's
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`breach of contract claim for any reason other than preemption, the Court takes no position on
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`whether or not the Estate's theory of breach is viable. Rather, having identified the basis of the
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`Estate's breach of contract claim, the Court turns to the question of preemption under federal
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`copyright law.
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`2.
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`The Breach of Contract Claim Is Not Preempted
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`"The Copyright Act exclusively governs a claim when: (1) the particular work to which
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`the claim is being applied falls within the type of works protected by the Copyright Act ... and
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`(2) the claim seeks to vindicate legal or equitable rights that are equivalent to one of the bundle
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`of exclusive rights already protected by copyright law." Briarpatch Ltd. v. Phoenix Pictures,
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`Inc., 373 F.3d 296,305 (2d Cir. 2004) (citing 17 U.S.C. § 301(a); Nat 'I Basketball Ass 'n v.
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`Motorola, Inc., 105 F.3d 841, 848 (2d Cir. 1997)). The first prong of this test is referred to as the
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`"subject matter requirement," and the second prong is referred to as the "general scope
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`requirement." Id.
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`Paramount asserts, and the Estate does not contest, that the subject matter requirement is
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`satisfied here. (Mot. 16) The subject matter requirement "is satisfied if the claim applies to a
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`work of authorship fixed in a tangible medium of expression and falling within the ambit of one
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`of the categories of copyrightable works." Briarpatch, 373 F.3d at 305. Because both literary
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 10 of 18
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`works and motion pictures are explicitly protected by the Copyright Act, the Court agrees that
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`the subject matter requirement is met. See 17 U.S.C. §§ 102(a)(1) and (a)(6).
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`Whether the general scope requirement is satisfied, however, is deeply contested by the
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`parties. In assessing whether the Estate's breach of contract claim seeks to vindicate rights that
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`are equivalent to rights already protected by copyright law, the Court is instructed by the Second
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`Circuit's recent decision in Forest Park Pictures v. Universal Television Network, Inc., 683 F.3d
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`424 (2d Cir. 2012), which directly addressed preemption of breach of contract claims. l
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`In Forest Park, the Second Circuit considered the preemption of a breach of contract
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`claim brought by television show developers who alleged that a cable television network had
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`breached an implied contract term to pay reasonable compensation if the developers' concept
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`was used as a television show. The Second Circuit held that the developers' breach of contract
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`claim was not preempted by the Copyright Act because it had three qualitative differences with a
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`copyright violation claim: (1) it involved a right not provided for by the Copyright Act (i.e.,
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`receipt of payment for the use of a work); (2) it required proof of elements beyond use or
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`copying (i. e., mutual assent and valid consideration); and (3) it involved a right held only against
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`the network and not a right held against the world. 683 F.3d at 431.
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`Each of the three qualitative differences identified in Forest Park are present here. First,
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`contrary to Paramount's assertion, the Estate seeks to enforce a right that, if it exists, arises out of
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`the 1969 Agreement and not out of federal copyright law. That is, the Estate seeks to enforce its
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`purported right, arising out of the implied covenant of good faith and fair dealing, not to have its
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`contractual rights injured as the result of either Paramount claiming certain contractual rights for
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`1 The Court notes that Forest Park was published in the midst of the parties' briefing and was not cited in either
`party's papers. At oral argument, the Court gave both parties an opportunity to address the Second Circuit's
`decision. Following oral argument, neither party requested an opportunity to provide supplemental briefing.
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 11 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 11 of 18
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`itself or disclaiming the Estate's holding of the same. Rather than seeking to enforce exclusive
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`rights provided by federal copyright law (i. e., rights against wrongful reproduction, adaption,
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`performance, distribution or display), the Estate seeks to enforce a right derived from the implied
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`covenant of good faith and fair dealing. See Briarpatch, 373 F.3d at 305 (in order to be
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`preempted, "the state law claim must involve acts of reproduction, adaptation, performance,
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`distribution or display.").
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`Second, like the claim in Forest Park, the Estate's claim requires proof of elements that
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`make it qualitatively different from a copyright infringement claim. In order to demonstrate
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`copyright infringement, a party must show ownership of a valid copyright and copying of the
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`protectable elements of the copyrighted work. See Medforms, Inc. v. Healthcare Mgmt.
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`Solutions, Inc., 290 F.3d 98, 109 (2d Cir. 2002). By contrast, the Estate's claim involves neither
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`use nor copying. Rather, in order to prevail on its claim, the Estate must show that Paramount
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`has a contractual obligation not to interfere with the Estate's exercise of its book publishing
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`rights and that Paramount breached that obligation. Thus, the elements of the Estate's breach of
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`contract claim distinguish it from a copyright infringement claim. See Forest Park, 683 F.3d at
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`430 ("[I]f an extra element is required instead of or in addition to the acts of reproduction,
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`performance, distribution or display ... there is no preemption.") (citing Computer Assocs. Int'l,
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`Inc. v. Altai, Inc., 982 F.2d 693,716 (2d Cir. 1992»; Briarpatch, 373 F.3d at 305 (state law
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`claim is not preempted if it contains "extra elements").
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`Third, the Estate's claimed right is one that it has only against Paramount and not a right
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`that it has against the world. As the Seventh Circuit held in ProCD, Inc. v. Zeidenberg, 86 F.3d
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`1447,1454 (7th Cir. 1996): "A copyright is a right against the world. Contracts, by contrast,
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`generally affect only their parties; strangers may do as they please, so contracts do not create
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`exclusive rights." (quoted with approval in Forest Park, 683 F.3d at 431). Only Paramount is
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`obligated to comply with the provisions - implied or express - of the 1969 Agreement, and only
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`Paramount is potentially liable for violation of the covenant of good faith and fair dealing.
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`In sum, accepting the Estate's construction of the 1969 Agreement, the contract does not
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`simply require Paramount to honor the Estate's exclusive rights under the Copyright Act; it
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`requires Paramount to comply with a separate contractual obligation (i. e., not to engage in
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`conduct violative of the implied covenant of good faith and fair dealing). Because it is the
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`alleged violation of the latter obligation that forms the basis of the Estate's breach of contract
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`claim, the claim is not preempted, and Paramount's motion to dismiss the Estate's breach of
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`contract counterclaim is DENIED.
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`B. The Estate's Claim for Cancellation
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`Coupled with its breach of contract claim, the Estate seeks cancellation of the 1969
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`Agreement on the theory that Paramount's conduct amounts to an anticipatory repudiation of the
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`contract. 2 (Opp. 9-10) Paramount asserts that the Estate cannot establish anticipatory
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`repudiation because both parties have performed all of their express obligations under the
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`contract, meaning that there are no future obligations to cancel. (Reply 3-5) Paramount further
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`argues that even if it did have future obligations under the contract, they are not significant
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`enough such that a refusal to perform would amount to repudiation. (Reply 6-7)
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`The Estate disagrees, contending that both parties have an ongoing contractual obligation
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`not to interfere with or injure the other party's contractual rights, which obligation renders the
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`contract not yet fully performed by either party. (Tr. 13:14 - 14:10; Opp. 13) The Estate insists
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`2 Cancellation is a prospective remedy that "occurs when either party puts an end to the contract for breach by the
`other" and extinguishes the future obligations of both parties to the agreement. See 13-67 Corbin on Contracts §
`67.2.
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 13 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 13 of 18
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`that Paramount's interference with and refusal to recognize the Estate's holding of these rights
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`constitutes repudiation given the importance of these rights to Puzo. (Jd.) The Court need not
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`reach the question of whether or not the contract has been fully performed because the Estate has
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`not adequately alleged repudiation.
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`Under New York law, repudiation is generally defined as a refusal to perform with
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`respect to the entire contract. See In re Best Pay phones, 450 Fed. Appx. 8, at *2; Palazzetti
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`Import/Export, 2001 WL 1568317, at *9 (citing De Lorenzo v. Bac Agency Inc., 681 N.Y.S.2d
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`846,848 (3d Dep't. 1998)); City o/New York v. New York Yankees, 458 N.Y.S.2d 486,489
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`(N.Y. Sup. Ct. 1983) (partial repudiation insufficient to support claim of anticipatory breach);
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`22A N.Y. Jur. 2d Contracts § 455 ("The renunciation of the contract must be an unqualified and
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`positive refusal to perform, and must go to the whole of the contract."). According to
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`Paramount, it has performed all of its express contractual obligations and, therefore, it cannot
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`have refused to perform with the respect to the entire contract. (Reply pp. 6-7) Indeed, the
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`Estate acknowledges that Paramount has at least performed its express contractual obligation to
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`pay Puzo $50,000 plus a possible additional $25,000 depending on sales of The Godfather novel.
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`(Am. Cntrclm. ~ 2) Consequently, the Estate has failed to plead that Paramount refused to
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`perform with respect to the entire contract.
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`This does not, however, end the inquiry because the Estate contends that Paramount need
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`not have refused to perform the contract in its entirety; rather, according to the Estate, a refusal
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`to perform a portion of the contract is sufficient to constitute repudiation, so long as it is an
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`essential portion of the contract. (Tr. 14:23 - 15:6) Such a definition of repudiation can be
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`found in the treatises of Professors Corbin and Farnsworth and has been cited by some courts in
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`this Circuit. See 10-54 CORBIN ON CONTRACTS § 972 (2012) (repudiation generally involves a
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`13
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 14 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 14 of 18
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`refusal to perform with respect to the entire contract, but it also includes "refusal to render such a
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`material part of the promised performance that it goes to the essence of the contract"); II
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`FARNSWORTH ON CONTRACTS § 8.21 (3d ed. 2004) ("A repudiation is a manifestation by one
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`party to the other that the first cannot or will not perform at least some of its obligations under
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`the contract. ... For a repudiation to have legal effect, courts have generally required that the
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`threatened breach be serious enough that the injured party could treat it as total ifit occurred.");
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`Biopharmaceutics, Inc. v. Primavera Lab., Inc., 1995 WL 769006, at *8 (E.D.N.Y. Dec. 20,
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`1995). However, even under this broader definition of repudiation, the Estate's claim fails.
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`As discussed supra pp. 6-8, the Estate alleges that Paramount refused to perform its
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`obligation not to interfere with or injure the Estate's book publishing rights. Assuming that
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`Paramount was under such an obligation, the Estate nonetheless fails to adequately allege that
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`this obligation goes to the essence of the 1969 Agreement.
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`Looking to the text of the 1969 Agreement, its object is the sale of certain copyrights by
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`Puzo to Paramount in exchange for financial remuneration and acknowledgement in Paramount's
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`films. (Daum Decl. Ex. A) The Estate maintains that the contract does not include a conveyance
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`to Paramount of book publishing rights. (Am. Cntrclm. ~ 2) Thus, if the Court credits the
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`Estate's pleading, the book publishing rights were not part of the consideration exchanged by the
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`parties. The Estate cannot insist that these rights were the essence of the agreement while also
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`maintaining that they were not part of the bargain. The Court therefore finds that the Estate has
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`failed to allege that the book publishing rights were the essence of the 1969 Agreement.
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`Furthermore, if the book publishing rights were not the essence of the contract, then logic
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`dictates that any implied obligation not to injure or interfere with those rights also cannot "go to
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`the essence of the agreement." Consequently, Paramount's alleged refusal to perform the
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`14
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`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 15 of 18
`Case 1:12-cv-01268-AJN Document 30 Filed 09/26/12 Page 15 of 18
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`implied obligation is not sufficiently serious to constitute repudiation.
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`In conclusion, whether repudiation is defined as requiring refusal to perform with respect
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`to the entire contract or only with respect to an essential portion thereof, the Estate has failed to
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`adequately allege repudiation. Consequently, Paramount's motion to dismiss the Estate's claim
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`for cancellation is GRANTED.
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`C. The Estate's Claim for Rescission
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`As an alternative to cancellation, the Estate seeks rescission of the 1969 Agreement.
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`(Am. Cntrclaim. ~ 22) Rescission is considered an "extraordinary remedy" for breach of
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`contract, "appropriate only where the breach is found to be 'material and willful, or, if not
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`willful, so substantial and fundamental as to strongly tend to defeat the object of the parties in
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`making the contract. '" Canfield v. Reynolds, 631 F.2d 169, 178 (2d Cir. 1980) (quoting
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`Callanan v. Powers, 199 N.Y. 268, 284 (1910». Paramount moves to dismiss the Estate's claim
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`for rescission, arguing that the Estate cannot establish a sufficiently substantial breach of the
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`contract to warrant the "extraordinary remedy" of rescission. Because the Estate has failed to
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`allege that the book publishing rights are the object of the 1969 Agreement or that Paramount's
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`conduct defeated these rights, the Court agrees that the Estate has not alleged a breach meriting
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`rescIssIOn.
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`As an initial matter, the alleged breach is insufficient because, as discussed supra p. 14,
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`the Estate has failed to allege that the book publishing rights are the essence of the 1969
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`Agreement. Thus, even if P