WORDS MATTER MEDIA LLC v. CAF STUDIOS INC (2021)

The following e-filed documents, listed by NYSCEF document number (Motion 001) 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 were read on this motion to/for DISMISSAL.

Café Studios, Inc. (Café) is not entitled to dismissal pursuant to CPLR §§ 3211(a)(1) and 3211(a)(7) at this stage of the case. It is unclear on the record before the court, the extent to which Part One of the letter dated June 8, 2020 (the Term Sheet, NYSCEF Doc. No. 12) was not legally binding or enforceable.¹ To wit, although the preamble to Part One indicates that Part One of the Term Sheet was not binding or enforceable and contemplated a proposed acquisition that would be memorialized in a mutually agreed upon definitive agreement during or after the Option Period, Paragraph 1 of Part One of the Term Sheet as to the 12 month Revenue Share Arrangement appears to be binding and effective upon execution of the Term Sheet:

At the conclusion of a 12 month Revenue Share Arrangement, which commences upon execution of this term sheet, Company grants the Buyer a three month option to purchase Company (the “Option Period”)

(id., Part One, ¶ 1 [emphasis added]).

Additionally, pursuant to the express language of Paragraph 4 of the Term Sheet, it appears Café had the obligation at its cost and expense to produce no less than 40 episodes of the podcast:

4. During the 12 month Revenue Share Arrangement, Buyer would produce, at its own expense, no less than 40 episodes of the Words Matter Podcast, hosted by Joe Lockhart and Katie Barlow

(id., ¶ 4).

Stated differently, the Term Sheet, as drafted, appears to reflect a deal as to the allocation of costs, expenses, production and revenue sharing that was intended to be binding during the Option Period. It does not appear that this was merely an agreement to agree and that the language which indicates that Part One of the Term Sheet was non-binding was intended to convey that the terms of the potential acquisition contained in the Term Sheet were not binding until and unless a mutually agreed upon Purchase Agreement was executed. Café is also not entitled to dismissal at this stage of the proceeding based on their factual assertion that the Term Sheet contains at least one scrivener's error (Telerep, LLC v U.S. Intl. Media, LLC, 74 AD3d 401, 402 [1st Dept 2010]). Dismissal of the quasi-contract claims is equally inappropriate because Café disputes the existence of a binding agreement. (Am. Tel. & Util. Consultants, Inc. v Beth Isr. Med. Ctr., 307 AD2d 834, 835 [1st Dept 2003]). Finally, for the avoidance of doubt, the unjust enrichment cause of action, which seeks recovery for revenue and fees from podcast listeners, is not duplicative of the claim grounded in quantum meruit because this claim seeks recovery for the expenses of producing the podcast episodes. The court has considered Café’s remaining arguments and finds them unavailing.

Accordingly, it is

ORDERED that the motion to dismiss is denied; and it is further

ORDERED that defendant is directed to serve an answer to the complaint within 20 days of this decision and order; and it is further

ORDERED that counsel are directed to appear for a remote preliminary conference, on November 16, 2021, at 11:30 AM.

FOOTNOTES

1.   Capitalized terms used but not otherwise defined herein shall have the meaning ascribed thereto in the Term Sheet.

Andrew Borrok, J.