Commercial Division Blog

Posted: January 19, 2024 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Breach of Contract, Summary Judgment, Parole Evidence Rule, Merger Clause, Course of Conduct

Court Grants Motion for Summary Judgment Based on Breach of Unambiguous Contract Terms

On December 19, 2023, Justice Melissa A. Crane, of the New York County Commercial Division, issued a decision in Samsung Electronics Co. Ltd. v. MPEG LA, L.L.C., Index No. 656312/2022, granting plaintiff’s motion for summary judgment on its claim for breach of contract while denying defendant’s cross-motion to dismiss that claim. The court held that plaintiff’s claim was supported by the unambiguous language of the relevant agreement, and rejected the defendant’s argument that the parties’ agreement had been amended to reduce royalty payments to the plaintiff, explaining:

As explained on the record, there were not enough votes to amend the [Agreement Among Licensors (‘AAL’)]. Section 6 of the AAL, entitled ‘Amendments’ states that ‘any amendments to this Agreement must be in writing, specifically reference this Agreement, and shall require at least a three-fourths (3/4) vote of the members.’ More important, changing allocations required a supermajority of 80% (see AAL, §6.1). There is no dispute that the vote failed to achieve that supermajority. The only way that even a ¾ vote could exist would be for MPEG to count silence as a favorable vote. However, §6.1 required members to cast an actual vote.

. . .

The court will not consider MPEG's ‘course of dealing’ and other parole evidence from either party. The language of the contract is unambiguous, § 12.13 contains a merger clause and § 12.13.2 states that ‘no Amendment to this Agreement shall be effective unless such amendment is in writing.’ Therefore, MPEG' s evidence, if any, that the parties had a course of dealing to count silence as an affirmative vote is irrelevant. Thus, because there was no new allocation, MPEG failed to pay to Samsung the amounts due to it under the AAL. It is consequently in breach of its duties under the LAA.

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