Grain D'or LLC v. Wizman

Background

Grain D’Or LLC and Inbar Wizman entered into an Exclusive Management Agreement and an Exclusive Recording Agreement on November 1, 2017. The Management Agreement made Grain D’Or Wizman’s exclusive manager and required it to use best efforts to support her entertainment career. Wizman agreed to pay Grain D’Or 20% of defined gross earnings and to cooperate with instructions assigning royalty payments until Grain D’Or recovered specified expenses and investments.

The Recording Agreement gave Grain D’Or the exclusive right and obligation to produce and exploit Wizman’s recordings. Wizman agreed to perform musical works, and Grain D’Or agreed to record, market, and promote them. The agreement also required Grain D’Or to provide recording budgets and pay fixed amounts over the contract’s five contractual years.

The agreements initially ran for two years and included option periods. Wizman delivered fewer than the required eight recordings during the initial term and no recordings during the first option period. Grain D’Or continued the relationship and payments, however, and the parties disputed whether some payments were contractual prepayments or money that Eudes De Crecy paid Wizman for living expenses and other personal purposes.

In November 2020, Grain D’Or notified Wizman that it was suspending the contracts for two months because of the COVID-19 pandemic and its view that Wizman was not able to pursue her career normally. Grain D’Or later demanded that Wizman assign royalty income to it. Wizman terminated the agreements in March 2021 and alleged that Grain D’Or had breached them. Grain D’Or then sued for breach of contract. Wizman counterclaimed that De Crecy fraudulently induced her to enter the agreements by misrepresenting his and Grain D’Or’s ability to support her music career and by making personal promises.

Summary-judgment standard

Grain D’Or sought summary judgment under Federal Rule of Civil Procedure 56. Summary judgment is a ruling without a trial when the evidence shows no genuine dispute about a fact that could affect the outcome and the moving party is entitled to win under the law. The court viewed the evidence in the light most favorable to Wizman, the nonmoving party.

Management Agreement

Grain D’Or argued that Wizman materially breached the Management Agreement by refusing to sign instructions assigning her royalty payments. The court denied summary judgment on this claim for two independent reasons.

First, Grain D’Or had suspended its performance under the agreement’s force-majeure provision before demanding the royalty assignment. The provision allowed suspension if Wizman substantially failed to pursue her career or became physically or mentally unable to perform her material obligations. Grain D’Or relied on pandemic-related restrictions but did not establish that Wizman was unable to pursue her career through recording, travel, bookings, media, or other activities. A jury therefore could decide whether Grain D’Or’s suspension was itself a material breach that excused Wizman’s later performance.

Second, the agreement required written notice of a breach by certified or registered mail before the breach could be treated as material, followed by 30 days to cure. Grain D’Or first notified Wizman of the alleged royalty-assignment breach by email and did not show that its later notices were sent by certified or registered mail. The court therefore could not conclude as a matter of law that Wizman materially breached the Management Agreement.

Recording Agreement

Grain D’Or also sought summary judgment on its claim that Wizman breached the Recording Agreement by failing to deliver eight recordings during the initial term and six during the first option period. The court denied summary judgment.

The court recognized that Wizman delivered fewer than eight recordings during the initial term. But it found a factual question about whether Grain D’Or waived that breach by continuing to perform, exercising the first option period, making payments, and accepting the agreement’s benefits without notifying Wizman of the breach. The court also found factual questions about whether Wizman’s failure to make recordings during the first option period was excused by Grain D’Or’s own conduct, including its suspension of performance.

Unlike the Management Agreement, the Recording Agreement did not contain a force-majeure provision. The court stated that Grain D’Or therefore could not directly invoke force majeure under that agreement. It also found disputed issues about whether the parties’ interrelated provisions extended the Management Agreement’s force-majeure provision to the Recording Agreement and whether Grain D’Or’s additional payments were contract prepayments or personal payments from De Crecy. Those issues could not be resolved on summary judgment.

Fraudulent-inducement counterclaim

The court granted Grain D’Or summary judgment on Wizman’s fraudulent-inducement counterclaim. Fraudulent inducement generally requires proof of a material false statement or omission, knowledge that it was false, an intent to cause reliance, reasonable reliance, and damages.

The court found that Wizman had not identified evidence showing that De Crecy or Grain D’Or made a material misrepresentation. Wizman stated that De Crecy told her he had the resources and relationships to support her career, but she did not show how that statement was false. The court also held that her reliance would not have been reasonable as a matter of law. Wizman had consulted an attorney before signing, had never heard of Grain D’Or, did not research it, and understood that she was its first artist. The court concluded that she had not performed even the minimal diligence needed to establish reasonable reliance.

Emotional-distress allegation

Grain D’Or moved against what it interpreted as a counterclaim for intentional infliction of emotional distress. The court concluded that Wizman’s answer did not actually plead a separate emotional-distress claim. Instead, the statement that she became emotionally distressed appeared to describe damages allegedly resulting from the fraud claim. The court added that, even if Wizman had pleaded such a claim, it would fail as a matter of law because she did not provide admissible evidence establishing that she suffered emotional distress. The court therefore did not treat the emotional-distress allegation as a surviving counterclaim.

Other claims and disposition

Although Grain D’Or’s motion was described as seeking judgment on all claims, its briefing addressed only the two breach-of-contract claims, the fraudulent-inducement counterclaim, and the alleged emotional-distress claim. The court held that Grain D’Or waived its request for summary judgment on the complaint’s Third through Eighth Causes of Action. The court’s conclusion states that the motion was denied as to the breach-of-contract claims and granted as to the fraudulent-inducement counterclaim. The Clerk was directed to close the summary-judgment motion.