Commercial Division Blog

Posted: February 3, 2023 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Commercial, Summary Judgment

License Agreement Properly Terminated Based On Material Breach

In a Decision and Order, dated January 13, 2023, in Screen Media Ventures, LLC v. Capella International, Inc. Index No. 654358/2012, Justice Andrew Borrok granted Capella International’s motion for summary judgment in its entirety.  The Court explained:

Capella is entitled to a declaration that the Termination Notice was valid. It is well settled that when a party to a contract is in breach, the other party must make an election between declaring a breach and terminating the contract or, alternatively, ignoring the breach and continuing to perform under the contract (Rebecca Broadway LP v Hotton, 143 AD3d 71, 80--81 [1st Dept 2016]Parlux Fragrances, LLC v S. Carter Enterprises, LLC, 204 AD3d 72, 86 [1st Dept 2022]Albany Med. Coll. v Lobel, 296 AD2d 701, 702 [3d Dept 2002]). On the record before the Court, and as discussed above, Screen Media was in material breach of the License Agreement because Screen Media failed to timely provide accurate accounting statements, hid certain distribution for which it owed money (and to avoid making payments) and failed to make payments when due pursuant to the terms of the License Agreement. Thus, the Termination Notice was effective when sent.

Capella is also entitled to summary judgment that Screen Media breached the License Agreement because (i) Screen Media failed to furnish the accounting statements within 60 days following the end of the 4th quarter of 2010 as required by the License Agreement, (ii) they failed to pay amounts due under the License Agreement, (iii) they failed to report and pay for certain distribution of the films and (iv) they streamed licensed films on the online streaming service Popcornflix in violation of the License Agreement. These are material breaches to the License Agreement. They go to the very heart of the deal. For the avoidance of doubt, Screen Media's deduction of attorneys fees in pressing its claims in this case are also inappropriate and constitute damages due Capella.

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