Naor World Media Films, Inc. v. JC Production

Background

Naor World Media Films, Inc. and Leone Living Trust sued JC Production and Samsara Prod concerning an agreement under which JC received exclusive rights to distribute four films in specified territories. Naor World alleged that JC distributed the films outside the authorized territories, distributed them without proper copyright notices, and failed to pay amounts required by the agreement.

JC asserted twenty affirmative defenses and five counterclaims. JC alleged that Naor World did not own the copyright to “Evil Eye,” that an entity called INTRAMOVIES claimed the applicable rights, and that Naor World fraudulently induced JC to enter the distribution agreement. The counterclaims were for breach of contract, fraud or fraudulent inducement, fraudulent concealment, breach of fiduciary duty, and indemnification.

Motion to dismiss the counterclaims

Naor World moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a pleading does not state a legally sufficient claim. The court also applied Rule 9(b), which requires fraud allegations to describe the circumstances of the alleged fraud with particularity.

The court granted the motion as to the fraudulent-inducement and fraudulent-concealment counterclaims. It held that JC’s allegations largely repeated the elements of those claims without identifying a specific material misrepresentation, showing that Naor World intended to induce reliance, or providing facts creating a strong inference of fraudulent intent. The court considered the copyright registration and an Italian court decision that JC submitted because it found those documents incorporated into the counterclaims by reference, but concluded that they did not cure the pleading deficiencies.

The court also granted the motion as to the breach-of-contract, breach-of-fiduciary-duty, and indemnification counterclaims. JC did not identify which terms of the parties’ agreement Naor World allegedly breached. JC did not allege facts showing that its relationship with Naor World involved a higher level of trust than ordinarily exists in an arm’s-length business transaction. And although the agreement contained an indemnification provision, JC did not allege that a third party sought to hold it liable or that JC had breached a duty owed to a third party.

Motion to strike affirmative defenses

Naor World separately moved under Rule 12(f) to strike JC’s affirmative defenses. A motion to strike asks the court to remove an insufficient, redundant, immaterial, impertinent, or scandalous defense from the pleadings. The court explained that such motions are generally disfavored and that defenses ordinarily must be evaluated individually.

The court denied the motion. Naor World made a generalized challenge to all of JC’s affirmative defenses rather than explaining why each defense was insufficient. The court stated that it could not reconstruct Naor World’s arguments or evaluate the defenses individually. It also found that Naor World had not explained how the defenses prejudiced it at the early stage of the litigation.

Disposition

The court granted Naor World’s motion to dismiss JC’s counterclaims and denied Naor World’s motion to strike JC’s affirmative defenses. The Clerk of Court was directed to terminate the motion at ECF No. 46.