MEP II MEP CAPITAL HOLDINGS III v. Arclight Films International Pty Ltd., Defendant. (2026)

The following e-filed documents, listed by NYSCEF document number (Motion 001) 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16 were read on this motion to/for DISMISS .

This action arises out of a commercial dispute between plaintiffs MEP Capital Holdings II, L.P. ("MEP II") and MEP Capital Holdings III, L.P. ("MEP III") (collectively "Plaintiffs") and defendant Arclight Films International Pty Ltd. ("Defendant"). Defendant moves to dismiss Plaintiffs' first, second, third, and fifth causes of action pursuant to CPLR 3211 (a) (1) and (a)(7). Plaintiffs oppose the motion.

Allegations

According to the Complaint, Plaintiffs are media industry investors and content owners and Defendant is a television and film sales agent that brokers the sale and distribution of media content (Complaint ¶¶ 2-3 [NYSCEF Doc. 1]). In late 2021, Defendant allegedly proposed that Plaintiffs acquire a media collection known as the "Lotus Library" and Plaintiffs thereafter acquired the collection with the aid of Defendant's attorney, non-party Tom Lewis ("Lewis"), in November 2021 (id. ¶¶ 23-25). MEP II thereafter became the owner of the Lotus Library (id. ¶ 2).

Plaintiffs contend that they negotiated with Defendant for it to act as the servicing and sales agent for the Lotus Library titles, which would entitle it to certain fees on existing licensing obligations from the library's distributors, as well as a commission on deals it closed for the acquisition or renewal of distribution agreements (id. ¶ 28). Lewis allegedly took the lead in drafting the proposed sales agent agreement between MEP II and Defendant (id. ¶¶ 29-38; NYSCEF Doc No. 8, "Sales Agent Agreement"). During the negotiations, both parties expressed their shared understanding that Plaintiffs would retain discretion to approve or reject deals proposed by Defendant, which Plaintiffs maintain is a standard industry practice (Complaint ¶¶ 33-34). Plaintiffs allege that they conveyed to Lewis their expectation that this reservation of rights would be included in the Sales Agent Agreement, but that Lewis did not include the provision in the draft (id. ¶¶ 35-36). The Sales Agent Agreement was never finalized or executed (id. ¶ 38).

Nevertheless, Defendant purportedly held itself out as Plaintiffs' sales agent for the Lotus Library titles and allegedly entered into several unauthorized agreements with distributors (Complaint ¶¶ 39-40). Plaintiffs claim that Defendant entered an agreement to distribute at least two Lotus Library films without obtaining their approval, concealed these agreements, underreported or did not report revenues collected therefrom, and then provided Plaintiffs with "misinformation, incomplete information, and fraudulent documentation" when asked for disclosure (id. ¶¶ 41-72). Defendant also allegedly misappropriated revenues assigned to Plaintiffs on films it produced and financed (Complaint ¶¶ 73-95). Separately, Plaintiffs allege that MEP III was induced into financing a film by Defendant's execution of an irrevocable Guarantee of payment of $900,000, and that Defendant defaulted under the Guarantee by failing to secure distribution rights for the film (id. ¶¶ 96-103).

Plaintiffs asserts five causes of action for: (1) breach of fiduciary duty (asserted by MEP II); (2) unjust enrichment (asserted by MEP II); (3) constructive trust (asserted by both Plaintiffs); (4) breach of contract under the Guarantee (asserted by MEP III); and (5) declaratory judgment that no sales agent relationship exists between Plaintiffs and Defendant with respect to the Lotus Library titles (asserted by MEP II).

Discussion

"On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction" Leon v Martinez, 84 NY2d 83, 87 [1994], citing CPLR 3026). "We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (id. at 87-88). Allegations consisting of bare legal conclusions with no factual specificity are insufficient to survive a motion to dismiss (Godfrey v Spano, 13 NY3d 358, 373 [2009]). "In assessing a motion under CPLR 3211(a)(7), however, a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint and the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one" (id. [internal citation omitted]). "Under CPLR 3211(a)(1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Leon v Martinez, supra at 88).

Defendant argues that the first, second, third, and fifth causes of action for, respectively, breach of fiduciary duty, unjust enrichment, constructive trust, and declaratory judgment, should be dismissed as duplicative of an unpled breach of contract claim that Plaintiffs could have brought under the Sales Agent Agreement. Despite the allegations to the contrary, Defendant contends that the Sales Agent Agreement was a valid contract between itself and MEP II despite not having been signed, because there is documentary evidence in the form of emails between the parties indicating that they had entered into the agreement and partially performed thereunder (Emails [NYSCEF Docs. 9-11]). With respect to the third cause of action for constructive trust, Defendant argues it is duplicative of both MEP III's claim for breach of the Guarantee (fourth cause of action) as well as any unpled contract claims MEP II could have asserted arising from the financing agreements Plaintiffs claim to have entered with Defendant (Memo in Supp. at 6-7, citing Complaint ¶¶ 76-95 [NYSCEF Doc. 5]).

In opposition, Plaintiffs argue that MEP II and Defendant never had a valid contract as they never finalized the Sales Agent Agreement and, rather, merely had a common law principal-agent relationship. They argue that the Sales Agent Agreement was never ratified because it did not include the industry-standard reservation of rights for MEP II (Memo in Opp. at 3, citing Complaint ¶¶ 35-38 [NYSCEF Doc. 13]). As to the documentary evidence, they maintain that the emails do not utterly refute the allegations in the Complaint, because they are ambiguous as to whether the parties agreed to or ratified the Sales Agent Agreement. Given the lack of contract between MEP II and Defendant, Plaintiffs contend the breach of fiduciary duty, unjust enrichment, and constructive trust claims are proper and, in any event, may be pled in the alternative. They further argue they may seek declaratory judgment regarding their principal-agent relationship with Defendant as they have no other available remedy.

For the reasons argued by Plaintiffs, and accepting the facts pled in the complaint as true at the pleading stage, including the allegations that the parties did not execute the Sales Agent Agreement or have a meeting of the minds, Defendant has not established its entitlement to dismissal of MEP II's claims for breach of fiduciary duty (cf. NYAHSA Servs., Inc., Self-Ins. Trust v Recco Home Care Servs., Inc., 141 AD3d 792, 794-795 [1st Dept 2016]), unjust enrichment (cf. Panwest NCA2 Holdings LLC v Rockland NCA2 Holdings, LLC, 205 AD3d 551, 552 [1st Dept 2022]), or constructive trust (see Fellner v Morimoto, 52 AD3d 352, 353 [1st Dept 2008]; see also Homapour v Harounian, 182 AD3d 426, 427 [1st Dept 2020]) as duplicative of a claim for breach of contract which Plaintiffs have not even asserted. Neither is Defendant entitled to dismissal of Plaintiffs' claim for declaratory judgment on the basis that it has an adequate, alternative remedy under an unpled contract claim (cf. Upfront Megatainment, Inc. v Thiam, 215 AD3d 576, 578 [1st Dept 2023]).

Indeed, an enforceable contract exists where there is "an offer, acceptance of the offer, consideration, mutual assent, and an intent to be bound . . . . The meeting of the minds must include agreement on all essential terms" (Kowalchuk v Stroup, 61 AD3d 118, 121 [1st Dept 2009]). Here, the Complaint explicitly alleges that the "parties never finalized or executed the [Sales Agent Agreement]" because they did not agree on an essential term of the contract, namely the exclusion of MEP II's purported "customary rights" as owner of the Lotus Library to approve or deny deals entered by Defendant for the library's content (Complaint ¶¶ 33-38). Accepting the allegations as true at the pleading stage, Plaintiffs sufficiently allege that the Sales Agent Agreement was never approved and that MEP II and Defendant only had a common law principal-agent relationship with respect to the Lotus Library.

The Court further finds that Defendant's purported documentary evidence is insufficient to warrant dismissal under CPLR 3211(a)(1). The first set of emails Defendant proffers reflect the parties' ongoing negotiation of the terms of the Sales Agent Agreement in October 2020 (NYSCEF Doc. 9). These emails do not indicate unambiguous agreement between the parties on the putative agreement's terms; rather, they indicate the exchange of "redlines," "tweaks," and "proposed language" (id.). Nowhere does this set of emails indicate that the Sales Agent Agreement was finalized, approved, or executed.

The second tranche of emails from January and February 2022, between the parties and a non-party licensee of a Louts Library title, contains no mention of the Sales Agent Agreement (NYSCEF Doc. 10). Although Defendant is described therein as MEP II's "sales agent" for the title, this comports with the Complaint's allegation of a common law agency relationship. The last emails, from May 2023, are a brief exchange between one of Plaintiffs' officers and Lewis asking if they "have a signed Lotus [Sales Agent Agreement]" and "If not, can we please work to get one in place?" to which Lewis answered: "I don't have a signed copy" (NYSCEF Doc. 11). Read together, these documents do not utterly refute Plaintiff's factual allegations about MEP II never having entered the Sales Agent Agreement with Defendant (see VXI Lux Holdco S.A.R.L. v SIC Holdings, LLC, 171 AD3d 189, 193 [1st Dept 2019]).

As the Complaint sufficiently alleges that the parties never entered the Sales Agent Agreement for the Lotus Library and such allegations are not refuted by Defendant's proffered documentary evidence, the Court finds that the first, second, third, and fifth causes of action are adequately pled by MEP II. The motion is therefore denied as it relates to those claims.

However, MEP III's third cause of action for constructive trust cannot be sustained, as it alleges Defendant's breach of a written sales guarantee and does not allege unjust enrichment or a confidential fiduciary relationship with Defendant (Complaint ¶¶ 96-103, 124-128; see Evans v Winston & Strawn, 303 AD2d 331, 333 [1st Dept 2003] [equitable remedy of constructive trust unavailable where it does not "appear that the legal remedy of damages will be inadequate"]; see also Abacus Fed. Sav. Bank v Lim, 75 AD3d 472, 474-475 [1st Dept 2010] ["The elements necessary for the imposition of a constructive trust are a confidential or fiduciary relationship, a promise, a transfer in reliance thereon, and unjust enrichment"]). Therefore, Defendant's motion to dismiss is granted as directed to MEP III's third cause of action for constructive trust.

Accordingly, it is hereby

ORDERED that Defendant's motion to dismiss is GRANTED IN PART only as directed to the third cause of action for constructive trust asserted by Plaintiff MEP Capital Holdings III, L.P., and is otherwise DENIED as directed to the causes of action asserted by MEP Capital Holdings II, L.P.; and it is further

ORDERED that the parties are directed to appear for a preliminary conference to be calendared by the Clerk of the Court.

This constitutes the Decision and Order of the Court.

Dated: 8/13/2026

Ashlee Crawford, J.