42 F. Supp. 3d 488
S.D.N.Y.2013Background
- Plaintiff Safka Holdings LLC sues iPlay, Inc. for breach of a June 1, 2012 License Agreement granting trademark rights in exchange for royalties; iPlay owns the trademarks and retained discretion over approvals.
- Three weeks later, iPlay sent a June 22, 2012 letter stating it could not proceed, sought mutual withdrawal, and claimed it had sole discretion to approve material and terminated the agreement.
- FAC added claims for repudiation/anticipatory breach and breach of the implied covenant; other quasi-contractual claims were abandoned.
- Defendant moved to dismiss under Rule 12(c); the court analyzed extrinsic materials, duplicative claims, and damages relief, and granted in part and denied in part.
- Court ultimately held there was a repudiation, denied retraction as outside the pleadings, dismissed implied covenant claim and certain damages requests, and dismissed duplicative breach of contract as duplicative of repudiation claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the June 22, 2012 letter repudiate the License Agreement? | Safka contends the letter unambiguously repudiated. | iPlay argues the letter expresses a mutual withdrawal. | Yes; the letter was a positive, unequivocal repudiation. |
| Can iPlay's July 25 letter retract repudiation, if considered? | Even if repudiation occurred, retraction could be alleged. | Retracted repudiation cannot be considered at this stage. | Retracting repudiation cannot be considered on a Rule 12(c) motion. |
| Whether the breach of contract claim is duplicative and should be dismissed as duplicative of repudiation? | The breach claim seeks damages for the same conduct. | The claims are duplicative and overlap in relief. | Duplicative breach-of-contract claim dismissed sua sponte. |
| What damages are recoverable for breach of contract and related theories? | Plaintiff seeks lost license value and related damages. | Some damages (e.g., unjust enrichment, punitive, injunctive) are inappropriate. | Damages for the value of the license may proceed; several damages types are barred. |
| Is the implied covenant of good faith and fair dealing cognizable here? | June 22 letter breached the implied covenant. | Covenant applies only if discretion is exercised; no actual exercise alleged. | Implied covenant claim dismissed. |
Key Cases Cited
- DiFolco v. MSNBC Cable, LLC, 622 F.3d 104 (2d Cir. 2010) (repudiation requires a clear, unequivocal statement of nonperformance when in writing)
- Lucente v. Int’l Bus. Machs. Corp., 310 F.3d 243 (2d Cir. 2002) (anticipatory repudiation occurs when a party declares intent not to perform)
- Dalton v. Educ. Testing Serv., 87 N.Y.2d 384, 639 N.Y.S.2d 977, 663 N.E.2d 289 (1995) (implied covenant applies where contract contemplates discretionary decisions; cannot imply beyond terms)
- Schonfeld v. Hilliard, 218 F.3d 164 (2d Cir. 2000) (value of an income-producing asset can be determined via hypothetical market for intangibles)
- Atkins Nutritionals, Inc. v. Ernst & Young, LLP, 301 A.D.2d 547, 754 N.Y.S.2d 320 (2003) (lost profits must be within contemplation of parties at contract formation)
- Yenrab, Inc. v. 794 Linden Realty, LLC, 68 A.D.3d 755, 892 N.Y.S.2d 105 (2009) (striking lost profits where not contemplated by parties at contract formation)