Wild Bunch, SA v. Vendian Entertainment, LLC
256 F. Supp. 3d 497
S.D.N.Y.2017Background
- Wild Bunch (French distributor) alleges Vendían (NY financier/producer) and its president Michael Bassick induced it to enter financing deals for the film "Snowden" by representing Vendían could/would provide up to $3 million in gap financing.
- Wild Bunch relied on repeated oral assurances and a November 2014 email from Vendían stating an offer to "gap $0-3mm," and disclosed Vendían’s planned role to the production (Sacha) when entering a $13 million Sales Agency Agreement (SAA).
- Vendían later executed a 2015 Agreement and a 2016 Contract promising the $3 million, but never paid; Wild Bunch alleges the funds were controlled by an undisclosed principal, John Bassick, who could unilaterally cut off funding.
- Wild Bunch sued for breach of contract (against Vendían) and fraud/fraudulent inducement/fraudulent concealment (against Vendían and Michael Bassick). Defendants moved to dismiss the fraud claims as duplicative and for failure to plead reliance and particularity.
- The court denied the motion to dismiss the fraud claims in a bottom-line order, reasoning that (1) fraud claims against the non-signatory individual are not duplicative, (2) defendants had a duty to disclose the undisclosed controller, and (3) pre-contract false statements of present fact about ability to pay are collateral to the contracts and support fraudulent inducement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fraud claims are duplicative of breach of contract | Fraud arises from misrepresentations of present fact (Vendían’s ability to fund) and concealment of controlling principal; thus distinct from contract claim | Misrepresentations merely concern intent/ability to perform and therefore are duplicative under Bridgestone/Firestone | Not duplicative as to (1) individual Bassick (non-signatory) and (2) pre-contract statements of present fact and concealment of superior knowledge; post-contract assurances may be duplicative |
| Whether corporate officer (Bassick) can be sued for fraudulent inducement though not a signatory | Bassick made pre-contract representations inducing Wild Bunch; individual liability permissible | Fraud claim against officer is barred if duplicative of corporate contract claim | Court permits fraud claims against Bassick because he was not a contracting party and allegations do not show alter-ego status |
| Whether defendants had a duty to disclose superior knowledge (undisclosed principal controlling funds) | Vendían knew of John Bassick’s unilateral control and concealed it despite Wild Bunch’s reasonable inquiries; duty arose | Superior-knowledge doctrine doesn't extend to internal business practices or to statements about planned performance | Duty to disclose pleaded: superior knowledge of material fact (control of funds) that was not discoverable and material to Wild Bunch’s decision — survives pleading stage |
| Whether reliance and Rule 9(b) particularity are alleged sufficiently | Wild Bunch relied on documented email plus repeated oral assurances; alleged falsity explained (undisclosed controller) | Reliance was unreasonable given negotiation context; amended complaint omitted earlier allegations; fraud not pleaded with required particularity | Reliance is plausibly alleged and fact-intensive (not resolved on motion); fraudulent statements pleaded with factual basis for falsity — Rule 9(b) challenge fails at this stage |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: factual matter must state a plausible claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (framework for assessing plausibility on a motion to dismiss)
- Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13 (2d Cir. 1996) (fraud duplicative of contract unless separate duty, collateral misrepresentation, or special damages)
- Merrill Lynch & Co. Inc. v. Allegheny Energy, Inc., 500 F.3d 171 (2d Cir. 2007) (distinguishes present-fact misrepresentations from promissory statements; fraudulent inducement can be collateral)
- Aaron Ferer & Sons Ltd. v. Chase Manhattan Bank, N.A., 731 F.2d 112 (2d Cir. 1984) (superior-knowledge disclosure duty where one party possesses information peculiarly within its knowledge)
- Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC, 797 F.3d 160 (2d Cir. 2015) (reasonableness of reliance is fact-intensive and rarely resolved on a motion to dismiss)