Rebecca Broadway Limited Partnership et al., Respondents, v Mark Christopher Hotton et al., Defendants, and Marc Thibodeau, Appellant.
First Department, New York Supreme Court, Appellate Division
August 18, 2016
37 N.Y.S.3d 72
Nesenoff & Miltenberg, LLP, New York City (Philip A. Byler and Andrew T. Miltenberg of counsel), for appellant.
Schlam Stone & Dolan LLP, New York City (Erik S. Groothuis, Jonathan Mazer and Richard H. Dolan of counsel), for respondents.
OPINION OF THE COURT
Friedman, J.P.
This case arises from an unsuccessful effort to produce a Broadway musical about a ghost. After it was reported that a major foreign investor in the production had died, it emerged that the supposedly deceased backer had never been more than a ghost himself—the man had never existed, except as a deceptive construct conjured up by a dishonest fundraiser, who has since been incarcerated for this wrongdoing. The publicity agent for the show, when he began to suspect the truth about the supposedly deceased foreign investor, expressed his concerns to the producer‘s principal, who essentially told him to keep quiet about it. Apparently stung by this dismissive treatment, the publicity agent sent four anonymous emails to another potential investor (this one an actual, living person), who had wished to remain anonymous. The last of these emails, sent under a fictitious name, made various highly negative allegations about the producer and the show‘s prospects, and urged the potential investor not to back the play. After receiving this email, the potential investor promptly withdrew from involvement in the production, preventing it from going forward.
Plaintiff Rebecca Broadway Limited Partnership (RBLP) was formed in 2011 to stage a Broadway production of “Rebecca—The Musical,” a musical play based on Rebecca, the famous 1938 gothic novel by Daphne du Maurier.1 By a written agreement dated May 10, 2012, RBLP hired defendant Marc Thibodeau “as the Press Representative for the Play to provide public relations services as may customarily be required by [RBLP] to be rendered by the press representative of a first-class musical stage play production.”
In September 2012, RBLP was informed that Paul Abrams had suddenly died in London after contracting malaria while on a trip to Africa. RBLP shared this information with Thibodeau, who issued a press release on RBLP‘s behalf, dated September 8, 2012, announcing that the start of rehearsals for the show was being “delayed . . . by two weeks [from September 10 to September 24] due to the death of a key investor responsible for a $4.5 million investment pool in the production.” RBLP also subsequently informed Thibodeau that it was engaged in discussions with Laurence Runsdorf, a new prospective investor who might replace a significant portion of the funds that Abrams had been expected to provide. RBLP also informed Thibodeau that Runsdorf wished to keep his involvement in the production confidential.
After the announcement of the demise of the foreign investor, Thibodeau spoke with Patrick Healy, a New York Times reporter who was investigating the matter. From his discussions with Healy and research he conducted on his own, Thibodeau began to suspect that Abrams, a figure previously unknown on the Broadway scene, was a fictitious character. Thibodeau was unable to locate any obituary for a person named Paul Abrams corresponding to the description provided by Hotton, nor any other information verifying the existence of such a person. Thibodeau further discovered through an Internet search that several lawsuits for fraud were pending against Hotton. On September 21 and 24, 2012, Thibodeau discussed with Ben Sprecher, one of RBLP‘s two principals, his suspicions concerning the foreign investors supposedly located by Hotton. Sprecher responded by instructing Thibodeau not to discuss the matter with anyone (as recalled by Thibodeau, Sprecher said “don‘t go there about this stuff“) and further telling Thibodeau that “we are not going to talk about this anymore.”
Promptly after receiving the September 28 email, Runsdorf—who, as previously noted, had not wanted his involvement with the play to become publicly known—told RBLP that he was no longer interested in backing “Rebecca—The Musical.” RBLP was forced to cancel the first rehearsal for the show, which had been scheduled for the next week. “Rebecca—The Musical” has not opened on Broadway to date.
After Runsdorf‘s withdrawal, it emerged that Hotton, the fundraiser, had indeed created the fictitious investor Paul Abrams and his three associates and perpetrated other frauds upon RBLP in connection with the “Rebecca—The Musical” project. Hotton ultimately pleaded guilty to federal charges of wire fraud based on this scheme, and was sentenced to nearly three years in prison. So far as the record discloses, RBLP and its principals have not been accused of any wrongdoing in this matter.
In this action, as relevant to this appeal, RBLP asserts causes of action for breach of contract, tortious interference with business relations and defamation against Thibodeau. Thibodeau brings the instant appeal from Supreme Court‘s order granting RBLP‘s motion for summary judgment as to liability on its cause of action for breach of contract and denying
Initially, we hold that Supreme Court correctly denied Thibodeau‘s cross motion for summary judgment dismissing the defamation and tortious interference claims. With respect to the defamation cause of action, even if RBLP constituted a limited-purpose public figure in connection with matters relating to the attempted production of “Rebecca—The Musical” (see Perez v Violence Intervention Program, 116 AD3d 601, 601-602 [1st Dept 2014], lv denied 25 NY3d 915 [2015]), and would therefore be required to prove “actual malice” within the meaning of New York Times Co. v Sullivan (376 US 254 [1964])—the highest potentially applicable standard of proof on a defamation claim—to prevail at trial, a jury could find that there is clear and convincing evidence that Thibodeau wrote the September 28 email either with knowledge of the falsity of statements made in that email or with reckless disregard for the truth or falsity of such statements (see New York Times Co. v Sullivan, 376 US at 279-280; Kipper v NYP Holdings Co., Inc., 12 NY3d 348, 357 [2009]).2
Similarly, the court properly found that issues of fact precluded summary judgment dismissing the claim for tortious interference with prospective business relations, inasmuch as the record contains evidence to support a finding that Thibodeau caused the loss of the play‘s financing, either through the use of wrongful means (specifically, the use of Runsdorf‘s identity, which was RBLP‘s confidential information, to send the email) or with the sole purpose of inflicting harm on RBLP (see e.g. CBS Corp. v Dumsday, 268 AD2d 350, 352-353 [1st Dept 2000]). The truth of Thibodeau‘s claim that he was acting in the interest of investors, rather than with the sole purpose of harming RBLP, is a contested issue to be determined by the factfinder at trial.
As to the breach of contract cause of action, Supreme Court properly granted RBLP summary judgment as to liability
Thibodeau argues that RBLP should not have been granted summary judgment as to liability on the breach of contract claim because an issue of fact exists as to whether his sending of the emails, even if that would otherwise constitute a breach, might have been excused by a prior breach of the implied duty of good faith and fair dealing by RBLP itself. On this record, Thibodeau‘s contention is, as Supreme Court aptly put it, “a nonstarter,” and without merit as a matter of law. There is nothing in the record to support Thibodeau‘s contention that RBLP undermined his ability to perform his duties under the contract honestly or his contention that RBLP required him to engage in conduct that would implicate him in
Thibodeau does claim that, on September 21 and 24, 2012, Sprecher responded dismissively to Thibodeau‘s expressions of concern that Abrams might be fictitious. In those exchanges, as previously described, Sprecher essentially instructed Thibodeau to keep quiet about the Abrams matter, both in dealing with the public and internally. However, RBLP, as Thibodeau‘s principal, had no obligation to be more forthcoming in discussing the financing issue with him, or to treat his concerns more respectfully than it did. In this regard, it should be borne in mind that, as Supreme Court emphasized in its decision, Thibodeau had no responsibility whatsoever for the financing of the project or for dealing with the project‘s investors. His role was simply to prepare and issue press releases and to deal with reporters. If RBLP did not wish Thibodeau to address financing issues in these communications, that was its prerogative as the principal in this principal-agent relationship. Nothing that RBLP did, or is alleged to have done, interfered with Thibodeau‘s ability to perform honestly the limited task charged to him.
In support of his position that RBLP breached the covenant of good faith and fair dealing, Thibodeau points to deposition
Even if RBLP could be deemed to have somehow breached its implied duty to Thibodeau of good faith and fair dealing before he committed his own breach of that covenant by sending the anonymous emails, we would not reach a different result. Any such material breach by RBLP, before the breach by Thibodeau, would have given Thibodeau grounds to suspend his own performance and, absent a timely cure by RBLP of its breach, to terminate his contract with RBLP (and then, perhaps, to seek damages for breach) (see Chemical Bank v Stahl, 272 AD2d 1, 15 [1st Dept 2000]; Restatement [Second] of Contracts § 237 and Comments a and b thereto; 2 Farnsworth, Contracts § 8.15 [3d ed 2004]). But a first material breach of the parties’ agreement by RBLP, if there was one, would not have justified Thibodeau‘s remaining in RBLP‘s employ while using confidential information entrusted to him to sabotage the production. A party to a bilateral contract, when faced with a breach by the other party, must make an election between declaring a breach and terminating the contract or, alternatively, ignoring the breach and continuing
In this case, Thibodeau, a sophisticated professional with many years of experience as a publicity agent for major Broadway productions, should have suspended his performance or terminated his agreement with RBLP if he sincerely believed that RBLP‘s conduct would implicate him in a scandal. Alternatively, if RBLP had instructed Thibodeau to issue a materially false press release or to respond falsely to press inquiries (and there is no evidence that it ever did so), Thibodeau would have had a right to refuse such a directive. He did not, however, have the right to continue as RBLP‘s publicist while sending a prospective provider of needed capital an anonymous communication deprecating the entire production and suggesting that the producers were guilty parties in a fraudulent scheme. Accordingly, as Supreme Court correctly held, RBLP is entitled to judgment as to liability on its cause of action against Thibodeau for breach of contract.
Accordingly, the order of the Supreme Court, New York County (Jeffrey K. Oing, J.), entered on or about May 28, 2015, which granted plaintiffs’ motion for summary judgment as to
Acosta, Renwick, Saxe and Kapnick, JJ., concur.
Order, Supreme Court, New York County, entered on or about May 28, 2015, affirmed, with costs.