COMPANY WAS ACCUSED OF “MATERIAL BREACHES”
Screen Media Ventures, LLC., a film distribution company, entered into an agreement with Capella International, Inc., wherein the former would market nine of the latter's films. In furtherance of the deal, Screen Media paid an advance and agreed to pay royalties -- with accounting statements and payments to issue quarterly.
When those statements were not timely supplied, Capella demanded compliance. And in 2010 conducted an audit of Screen Media’s books and records relating to the movies in question. Because that review revealed that income had been underreported, Capella terminated the parties’ agreement, and informed some of the sublicensees that its arrangement with Screen Media had ended and demanded that all future payments be directly remitted.
After Screen Media later filed suit in New York County Supreme Court alleging breach of contract, unjust enrichment, and libel per se, Cappella countered with claims of contract breach, an entitlement to an accounting, and for a declaration that the parties’ agreement had been validly ended.
When the New York County Supreme Court sided with the Capella, an appeal ensued, and the Appellate Division, First Department, was of the view that the contract had been properly terminated based on Screen Media’s “material breaches.” It also concluded that the unjust enrichment and libel per se claims asserted against Capella were “properly dismissed,” as they had been based on an “unfounded assertion’ that the latter had breached the contract. It also didn’t think that any of Capella’s statements to the sublicensees in question were “reasonably susceptible to a defamatory meaning.”
Given the foregoing, the underlying determination was affirmed, and the matter was permitted to proceed (before a judicial hearing officer or special referee) so that the amount of Capella’s damages could be determined.
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