Motion for Child Support in Roy'S Boys, L.L.C. v. Hologram Usa Entertainment, Inc.| Trellis.Law

On November 20, 2017 a Motion-Secondary was filed involving a dispute between Roy'S Boys, L.L.C., and Hologram Usa Entertainment, Inc., for Commercial Division (Declaratory Judgment) in the District Court of New York County.

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FILED: NEW YORK COUNTY CLERK 05/17/2018 06:27 PM INDEX NO. 657037/2017
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
X
ROY'S BOYS, L.L.C., Index No.: 657037/2017

Plaintiff, Mot. Seq. 003

-against- Hon. Ostrager
Barry

HOLOGRAM USA Part 61

ENTERTAINMENT, INC.,

Defendant.

MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF'S MOTION TO
STRIKE DEFENDANT'S UNNECESSARY AND SCANDALOUS PLEADINGS
OR IN THE ALTERNATIVE TO DISMISS THE COUNTERCLAIM FOR
FAILURE TO JOIN A NECESSARY PARTY

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TABLE OF CONTENTS

PRELIMINARY STATEMENT AND FACTUAL BACKGROUND.................................1 .1

ARGUMENT.................................................................................................................................3
... .....
.........
...........,....
„,.....,......,.......,.....,....,........

I. THE COURT SHOULD STRIKE HUSA'S UNNECESSARY AND
SCANDALOUS PLEADINGS PURSUANT TO CPLR § 3024(b).............3

II. ALTERNATIVELY, IF THE COURT DECLINES TO STRIKE THE
SCANDALOUS AND UNNECESSARY PLEADINGS, THE COURT
SHOULD DISMISS HUSA'S COUNTERCLAIM FOR FAILURE TO
JOIN A NECESSARY PARTY PURSUANT TO CPLR § 3211(a)(10).....8

CONCLUSION. .. ..........
10

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TABLE OF AUTHORITIES

Cases

Baychester Shopping Center, Inc. v. Llorente,
175 Misc.2d 739, 669 N.Y.S.2d 460 (Sup. Ct. N.Y. County 1997).............................8
...........
.8

Bayerische Landesbank, New York Branch v. Aladdin Capital Mgmt. LLC,
692 F.3d 42 (2d Cir. 2012)..........................................................................................8
.8

Chowaihi 4 Co. Fine Art Ltd. v. Lacher,
115 A.D.3d 600 (1st Dept. . .
2014)................................................................................6
............................
.6

Della Villa v. Constantino,
246 A.D.2d 867 (3d Dept. 1998).................................................................................7
.. .. ...................
...,.....,..........................

Ferrando v. New York City Bd. of Stds. 4 Appeals,
12 A.D.3d 287 (1st Dept.I 2004)..................................................................................8
...........................

Henshel v. Held,
13 A.D.2d 771 (1st Dept. ...... .....
....................................9
1961)..................................................................................9
.....................

Hurley v. Hurley,
266 A.D. 701 (3d Dept. .
1943).....................................................................................4

Joanne S. v. Carey,
115 A.D.2d 4(1st Dept. . .
1986)....................................................................................9
. ........................................
.. ..........

Lacher 4 Lovell-Taylor v. Chowaiki,
131 A.D.3d 898 (1st Dept. 2015)................................................................................6
..............................,......................................6
. ..........................

Lindhvist v. Honest Ballot Ass'n,
31 Misc.3d 1234(A), 932 N.Y.S.2d 761 (Sup. Ct. N.Y. County 2011)........................9

Matter of Stevens,
101 Misc.2d 1013 (1975).............................................................................................4
...........................................................................................4

Pearlberg v. Lacks,
23 A.D.2d 834 (1st Dept. .
1965)..................................................................................4

Plaza at Patterson L.L.C. v. Clover Lake Holdings, Inc.,
51 A.D.3d 931 (2d Dept. 2008) . ...............................7
.... .......................7

llil

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Schachter v. Mass. Protective Ass'n,
30 A.D.2d 540 (2d Dept. 1968)...................................................................................4
. ............................4

Soumayah v. Minnelli,
41 A.D. 3d 390 (1st Dept. .
2007).................................................................................6
.. ~ ~~~~~
. ~~
. ~~~~~~~~~~~~~~~~~
.....................
~~~t6

Swezey v. Lynch,
87 A.D.3d 119 (1st Dept. 2011)..................................................................................8
..............................................
...................................................... ~.. ~..8

Talbot v. Johnson Newspaper Corp.,
124 A.D.2d 284, 508 N.Y.S.2d 80 (3d Dept. 1986).....................................................5
... . .......... ..
...........................5

Wang v. TIAA-CREF Life Ins. Co.,
35 Misc.3d 1220(A), 953 N.Y.S.2d 550 (Sup. Ct. N.Y. County 2012)........................9............9
.......9

Wegman v. Dairylea Coop.,
50 A.D.2d 108 (4th Dept. ... ............. 8
1975)..............................................................................6,
..................6,

Rules

CPLR 5 1001(a)...............................................................................................................9
~ ~~ ~~~
.. ~~~~~
.... ~~~~~~re
......................
~~~oo~oo~~o~ot9

CPLR 10
§3211(a)(10)..............................................................................................8,
9,
............................................................................................8,

CPLR §§ 1001 and 1003.................................................................................................9
~.........
~.. ~....................9
...........

CPLR $3024(b).
@024(b). ...3,4,8,
............................3,4,8,10

jn
In

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"Plaintiff"
Plaintiff, Roy's Boys, L.L.C. (referred to as or "RB"), by its attorneys,

Shukat, Arrow, Hafer, Weber & Herbsman, L.L.P., submits this Memorandum of Law

in support of its Motion to Strike the Defendant's Unnecessary and Scandalous

Pleadings or, in the alternative, to Dismiss the Counterclaim for Failure to Join a

Necessary Party.

PRELIMINARY STATEMENT AND FACTUAL BACKGROUND

This action arises out of RB's request for a declaratory judgment terminating

an agreement between RB and Defendant, Hologram USA Entertainment, Inc.

"Defendant"
(referred to as or "HUSA"). As set forth in the Complaint, RB and HUSA

entered into an Agreement in February 2015 for the creation of a Roy Orbison

"live"
hologram for the purpose of creating a ninety minute performance. (See

Complaint 115-6, Doc. 2, Exhibit A to the Affirmation of Dorothy M. Weber dated

May 17, 2018).

The Agreement set forth certain deadlines by which HUSA was to provide a

hologram prototype. The Agreement provided, inter alia, that HUSA must:

Orbison"
(i) Provide a "Roy hologram prototype for Licensor review
("
within nine (9) months following the Effective Date ("Prototype
Deadline"
Deadline"); (ii) provide a detailed binding letter of intent, including
budget and business partners for distribution of the Production within
Deadline"
nine (9) months of the Prototype Deadline ("LOI Deadline"); and (iii)
stage the first performance of the Production within nine (9) months

following the LOI Deadline. In the event that any of the aforementioned

deadlines are not met, unless any such periods are extended by mutual

written Agreement, Licensor shall have the right to terminate the Initial

Term and retain all advances previously paid. (Agreement Schedule 2,
paragraph 1) (Emphasis added).

(Weber Aff. Ex. A, Complaint $6).

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When HUSA failed to provide a prototype by the first deadline, RB extended

the date, in writing, agreeing that HUSA had until May 16, 2016 to submit the

prototype. (Weber Aff. Ex. A, Compliant 17). Despite repeated and continuing

demands, no prototype was provided. (Weber Aff. Ex. A, Complaint 18).

Finally, on October 11, 2016, RB exercised its contractual right to end the term.

(Weber Aff. Ex. A, Complaint 19). RB contends there was no need on the part of RB

to claim HUSA was in breach - since HUSA failed to meet a pre-condition to
simply

keep the term in effect.

After receiving the notice of termination, HUSA did nothing. They never wrote

to reject the termination, they never submitted any additional material to RB, and

they did nothing to indicate that there was a contract still in effect. (Weber Aff. Ex.

A, Complaint 110). HUSA's failure to provide a hologram prototype, on its face, then

triggered additional termination dates, i.e., a detailed letter of intent, including

partners for distribution within nine (9) months of the Prototype Deadline and stage

their Production within nine (9) months of the LOI Deadline. (Weber Aff. Ex. A,

Complaint 16).

The contract clearly states that in the event that the aforementioned deadlines

are not met, unless any such periods are extended by mutual written agreement

Licensor shall have the right to terminate...(Agreement Schedule 2, paragraph 1,

Weber Aff. Ex. A, Complaint 16). On October 11, 2016, RB did just that. (Weber Aff.

Ex. A, Complaint 19). No mutual written agreement was entered into to extend an_y

of the dates in Schedule 2, paragraph 1.

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HUSA, in its Answer, Affirmative Defenses and Counterclaim dated April 27,

2018, (Doc. 39, Exhibit B to Weber Affirmation) devotes thirteen (13) paragraphs of

its Counterclaim to allegations concerning the conduct of "BASE Entertainment

L.L.C." "BASE"
and/or BASE Hologram (referred to as "BASE") and certain individuals, none

of whom are parties to this action (the "BASE Allegations")1. After attacking BASE

and the individuals named in those paragraphs, HUSA finally asserts a single

counterclaim against RB that has nothing whatsoever to do with the BASE

Allegations. Accordingly, the Court should strike the unnecessary and scandalous

pleadings set forth in the BASE Allegations of HUSA's Counterclaim and HUSA

should be directed to file an amended counterclaim.

ARGUMENT

L THE COURT SHOULD STRIKE HUSA'S UNNECESSARY AND
'
SCANDALOUS PLEADINGS PURSUANT TO CPLR § 3024(b)

The Court should strike the unnecessary and scandalous pleadings in the

BASE Allegations of HUSA's Counterclaim. These paragraphs of the Counterclaim

are replete with immaterial statements concerning alleged behavior that has no

bearing on the controversy set forth in the Complaint and in HUSA's cause of action

for breach of contract. The controversy here is whether RB properly terminated the

agreement or, as HUSA alleges, whether RB breached the contract.

' The Allegations"
"BASE refers to paragraphs 28-36; 40-42; and 48 of HUSA's
Counterclaim (Ex. B to Weber Aff.).

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In their Counterclaim HUSA raises multiple allegations against a former

employee of HUSA and current employee of BASE, and against BASE. None of these

are parties to the issues related to HUSA's breach of contract cause of action. It is

submitted that these allegations have been interposed for the purpose of improperly

disparaging these parties and to prejudice RB by implying that RB was somehow

involved with some bad conduct or conspiracy with former HUSA employees and

business partners - alleged activities which on their face are suspect since HUSA

clearly did not believe they were serious enough to sue over or even write a letter

putting RB (or any of the individuals described in the BASE allegations) on written

notice. It is submitted that these allegations are irrelevantly asserted for no legal

purpose whatsoever.

CPLR 5 3024(b) provides that "[a] party may move to strike any scandalous or

pleading."
prejudicial matter unnecessary inserted in the CPLR § 3024(b). When

events"
allegations of a pleading consist of a "recital of that are unnecessary and

prejudicial"
"possibly to a party, that party may move to strike such allegations under

CPLR 3024(b). v. 23 A.D.2d 834 (1st Dept. 1965). Scandalous
§ Pearlberg Lacks, 834,

matter is that which is both immaterial and reproachful or capable of producing harm

without justification. Hurley v. Hurley, 266 A.D. 701, 701 (3d Dept. 1943); Matter of

Stevens, 101 Misc.2d 1013 (1975). Prejudicial or scandalous matter that is

unnecessary to state a claim, and shows limited potential for relevance, should be

struck from pleadings. Schachter v. Mass. Protective Ass'n, 30 A.D.2d 540, 540 (2d

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Dept. 1968); Talbot v. Johnson Newspaper Corp., 124 A.D.2d 284, 285, 508 N.Y.S.2d

80 (3d Dept. 1986) (striking allegations that have the potential to prejudice a jury).

After HUSA's pre-answer motion to dismiss was denied (Doc. 25, Order dated

March 6, 20178 and filed March 7, 2018) and their counsel's application to withdraw

as counsel with withdrawn (Order dated April 17, 2018, Doc. 38), HUSA filed its

Answer, Affirmative Defense and Counterclaim on April 27, 2018 (Weber Aff. Ex. B,

Doc. 39).

The lawsuit between HUSA and RB is a straightforward contract dispute

which involves the sole issue of whether or not the contract was properly terminated.

The fact that HUSA dedicates thirteen (13) paragraphs of the Counterclaim to

allegations concerning the conduct of BASE and certain individuals, none of whom

are parties to this action, should be addressed for nothing more than it is: irrelevant,

scandalous mischief. After attacking BASE and the individuals named in those

paragraphs, HUSA finally asserts a single counterclaim against RB that has nothing

whatsoever to do with the allegations set forth in paragraphs 28, 29, 30, 31, 32, 33,

34, 35, 36, 40, 41, 42 and 48 (i.e.,the BASE Allegations). These paragraphs contain

scandalous allegations - such as fraud and bad faith - which have to do with
nothing

HUSA's breach of contract counterclaim or RB's action for declaratory judgment. As

such, they should be stricken, and HUSA should be forced to file an amended

counterclaim.

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Alternatively, if the Court determines that the allegations should not be

stricken, then HUSA's counterclaim should be dismissed for failure to join a

necessary party.

matter'
Whether or not statements are considered '"scandalous or prejudicial

inserted"'
that was 'unnecessarily into a pleading depends on if the "allegations are

action." (1st
relevant to a cause of Soumayah v. Minnelli, 41 A.D. 3d 390, 393 Dept.

2007) citing Wegman v. Dairylea Coop., 50 A.D.2d 108, 111 (4th Dept. 1975). Even if

scandalous and prejudicial material contains statements that may be admissible at

trial, the court may strike such statements if they are unnecessary for sufficiency of

pleading and would cause undue prejudice. See Chowaihi 4 Co. Fine Art Ltd. v.

115 A.D.3d 600 (1st Dept. Lacher 4 Lovell-Taylor v.
Lacher, 2014), aff'd, Chowaiki,

131 A.D.3d 898 (1st Dept. allegations of defendant's legal reputation
2015) (striking

from the record because they were unnecessary and unrelated to the cause of action).

Here, the allegations pled are solely for the purpose of influencing the Court or

jury since they have no relevance whatsoever relating to either RB's Complaint or

HUSA's Counterclaim.

InSoumayah v. Minnelli, the factual allegations that the defendant "asked the

suit" money"
plaintiff to reconsider the and "offered the plaintiff if he did not initiate

a suit were irrelevant to the plaintiffs contract cause of action. Soumayah, 41 A.D.3d

at 393. The Soumayah court struck these statements from the pleading, explaining

that the allegations were unrelated and unnecessary to the sufficiency of the claim,

jury.'"
and thus '"may instill undue prejudice in the Id., citing Wegman v. Dairylea,

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50 A.D.2d 108, 111 (4th Dept. 1975) (striking from the recording factual allegations

regarding the defendant's unethical conduct because they were not necessary to

present a prima facie breach of contract claim). See also Della Villa v. Constantino,

246 A.D.2d 867 (3d Dept. 1998) (upholding the trial court's decision to strike

scandalous and unnecessary references to an alleged meretricious relationship

between the defendants).

Here, HUSA's factual allegations in the BASE Allegations are clearly

unrelated and unnecessary to HUSA's breach of contract claim. The facts alleged by

HUSA in the BASE Allegations make no mention of RB nor the agreement at issue.

See Klinho v. Roch 4 Republic Enterprises, Inc., Index No. 0101603/2007, 2007 Slip

Op 32191(U) (Sup. Ct. NY July 11, 2007) (striking allegations that were not relevant

to plaintiffs claims as they were related to events outside the scope of the instant

lawsuit).

Such allegations serve no purpose other than to disparage entities and

individuals who are not parties to this lawsuit. Moreover, the inclusion of these

scandalous allegations will prejudice RB and should be eliminated from the

Counterclaim. See Plaza at Patterson L.L.C. v. Clover Lake Holdings, Inc., 51 A.D.3d

931(2d Dept. 2008)(reversing a lower court order denying motion to strike scandalous

pleadings that contained matters unrelated to the instant litigation that were both

prejudicial and unnecessary to the viability of the counterclaims).

To theextent that the allegations are inserted for the purpose of alleging that

RB acted in bad faith, such conduct or a cause of action based on that conduct is not

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recognized under New York law. Bayerische Landesbank, New York Branch v.

Aladdin Capital Mgmt. LLC, 692 F.3d 42, 58 (2d Cir. 2012) (Under New York law,

where a party seeks merely to obtain the benefit of a contractual bargain through an

action in tort, the tort claim is precluded as duplicative.). To the extent HUSA is

attempting to support a fraud claim, such a claim is not asserted.

In short, the BASE Allegations clearly have no relevance to HUSA's

Counterclaim and are inserted to prejudice RB. See legman v. Dairylea Coop., 50

A.D.2d 108 (4th Dept. 1974); Baychester Shopping Center, Inc. v. Llorente, 175

Misc.2d 739, 669 N.Y.S.2d 460 (Sup. Ct. N.Y. County 1997) (striking various

newspaper articles from the defendant's counterclaims as scandalous or prejudicial

material unnecessarily inserted in the answer). Accordingly, the Court should strike

HUSA's unnecessary and scandalous pleadings pursuant to CPLR § 3024(b).

II. ALTERNATIVELY, IF THE COURT DECLINES TO STRIKE THE
SCANDALOUS AND UNNECESSARY PLEADINGS, THE COURT
SHOULD DISMISS HUSA'S COUNTERCLAIM FOR FAILURE TO
'
JOIN A NECESSARY PARTY PURSUANT TO CPLR § 3211(a)(10)

If the Court declines to strike the scandalous and unnecessary pleadings, the

Court should dismiss HUSA's counterclaim for failure to join a necessary party. CPLR

§ 3211(a)(10) provides that a motion to dismiss may be made on the ground that "the

party."
court should not proceed in the absence of a person who should be a Swezey

v. Lynch, 87 A.D.3d 119, 125 n. 4 (1st Dept. 2011); see also Ferrando v. New Yorh City

Bd. of Stds. 4 Appeals, 12 A.D.3d 287, 288 (1st Dept. 2004) (party's failure to join a

necessary party is grounds for dismissal).

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("
The statute provides that non-joinder failure to join a person who should be

a party") may be asserted as an affirmative defense or by way of a motion that may

be made at any time. "CPLR § 3211(a)(10) must be read together with the provisions

joined' 1003."
on 'parties who should be found in CPLR 8 1001 and Lindhvist v.

Honest Ballot Ass'n, 31 Misc.3d 1234(A), 932 N.Y.S.2d 761 (Sup. Ct. N.Y. County

2011).

CPLR § 1001 sets forth the rule regarding necessary joinder of parties. It

provides that a person "who might be inequitably affected by a judgment in the action

made"
shall be a party. CPLR § 1001(a). "The guiding principle is whether the

absentees have such interest in the subject matter before the court that their

settled."
interests must necessarily be passed on if the controversy is to be Henshel v.

13 A.D.2d 771 (1st Dept. 1961). In other "[t]he reason for
Held, 771, words, primary

compulsory joinder of parties is to avoid multiplicity of actions and to protect

nonparties whose rights should be not jeopardized if they have a material interest in

matter."
the subject Wang v. TIAA-CREF Life Ins. Co., 35 Mise.3d 1220(A), 953

N.Y.S.2d 550 (Sup. Ct. N.Y. County 2012) citing Joanne S. v. Carey, 115 A.D.2d 4, 7

(1st Dept. 1986).

Here, while the cause of action asserted against RB is styled as a breach of

contract claim, the Counterclaim is styled to allege wrongdoing by HUSA's former

employee (whom they have not sued) and/or BASE (whom they have not sued). As

such, allowing the BASE Allegations to remain in the Counterclaim will not only

prejudice RB but will also prejudice the BASE parties.

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While HUSA makes damning accusations, they have not previously made any

claims against any of these individuals or BASE. It is patently clear, however, that

these allegations are inserted solely for the reason that they should be stricken. If

they are not stricken then BASE would be a necessary party and the action should

not proceed in its absence. It is respectfully submitted that these allegations should

be stricken so as to not prejudice RB or the BASE parties. Accordingly, if the Court

declines to strike the BASE Allegations, this Court should dismiss HUSA's complaint

pursuant to CPLR § 3211(a)(10) for failure to join a necessary party.

CONCLUSION

For all of the reasons stated above, the Court should grant RB's motion and

should strike the Defendant's unnecessary and scandalous pleadings pursuant to

CPLR § 3024(b); or, alternatively, if the Court declines to strike the scandalous and

unnecessary pleadings, the Court should dismiss HUSA's Counterclaim for failure to

join a necessary party pursuant to CPLR § 3211(a)(10); and grant such other, further

and different relief as this Court deems just and proper.

Dated: New York, New York

May 17, 2018

T A

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Barry R. Ostrager Track Judge’s New Case

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Document Filed Date

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November 20, 2017

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Motion-Secondary: Roy'S Boys, L.L.C. v. Hologram Usa Entertainment, Inc.

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