UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
Raymone K. Bain, et al., : : Plaintiffs, : : v. : Civil Action No. 09-0826 (JR) : MICHAEL J. JACKSON, et al., : : Defendants. :
MEMORANDUM
Prior to Michael Jackson’s death in June 2009,
Raymone K. Bain brought this case against him and his production
company, MJJ Productions, Inc., asserting claims for breach of
contract, quantum meruit, and unjust enrichment. Bain became
Jackson’s publicist in December 2003, but the suit arises out of
the expanded role Bain took in Jackson’s affairs beginning in the
middle of 2006. On May 30, 2006, Jackson signed a Personal
Services Agreement (“PSA”), drafted by Bain, that entitled Bain
to a ten percent finder’s fee for any agreement Jackson entered
that she or her associates generated. [#3-1]. Around this time,
Jackson also hired Bain as his personal General Manager, [#3-2],
and as his agent to review and approve music usage requests, [#3-
3].
Bain alleges that she initiated negotiations for
several projects on Jackson’s behalf in early 2007, including:
(1) a project with SONY Music to promote the 25th anniversary of
Jackson’s Thriller album release (“Thriller deal”); (2) Jackson’s participation at the 2008 Grammy Awards ceremony; (3) a project
with the Anschutz Entertainment Group, Inc. for development of
the Neverland Valley Ranch, recording and film projects, and live
performances at the O2 Arena in London (“AEG project”); and
(4) Jackson’s refinancing of his loan against the SONY/ATV music
catalog (“SONY/ATV refinancing”).1 Shortly after the
refinancing, but before the other projects were finalized,
Jackson abruptly cut ties with Bain, without paying the ten
percent finder’s fee on any of Bain’s projects. Because Jackson
ultimately cemented the agreements and earned money on them in
2008, Bain believes she is now entitled to a ten percent finder’s
fee for each deal pursuant to the PSA. She seeks $44 million in
damages, plus attorney’s fees and costs. [#3]
On June 18, 2009, the Jackson parties moved to dismiss
Bain’s claims, arguing that Bain’s suit was barred by a release
she signed on December 27, 2007 that discharged the Jackson
parties from any future claims and payments. [#24]. Jackson
died eight days later, on June 26, 2009. I stayed further
proceedings pending the appointment of an executor for Jackson’s
estate. I also notified the parties that the motion to dismiss
would be treated as a motion for summary judgment and invited
1 Bain also attempts to take credit for another deal – one involving use of Jackson’s music in a Vitamin Water advertisement aired during the Superbowl [#49] - but I have denied her motion to amend her complaint. [#50]
- 2 - them to submit all additional material pertinent to the motion.
[#31]. I dissolved the stay on November 20, 2009. The parties
then filed supplemental briefing and affidavit testimony
regarding the release and addressing Bain’s new allegation that
the release was fraudulently obtained. [#48, #54, #59, #60,
#61].
The Jackson parties replied with their own new
(alternative) argument – that the binding arbitration clause in
the Release requires dismissal or a stay in this case. Under New
York law, the contractual right to arbitrate may be waived, when
the requesting party “engaged in litigation to such an extent as
to manifest[] a preference clearly inconsistent with [its] later
claim that the parties were obligated to settle their differences
by arbitration and thereby elected to litigate rather than
arbitrate.” See, e.g., Les Constructions Beauce-Atlas, Inc. v
Tocci Bldg. Corp. of New York, Inc., 294 A.D.2d 409, 410 (N.Y.
App. Div. 2002) (internal quotations omitted). To avoid waiver,
a party must raise its desire to arbitrate promptly and must
decline to avail itself of pre-trial discovery and other attempts
to litigate on the merits. Id.
The Jackson parties’ first filing did not raise the
arbitration issue. Rather, they elected to address the merits of
Bain’s claim, and did not invoke their right to arbitration -
presumably realizing that the case would not be resolved quickly
- 3 - on the merits - until filing a reply brief on the motion to
dismiss on July 10, 2009. [#29, at 4-6]. I find that the
Jackson parties’ initial filings invoked the judicial process to
such an extent that their right to arbitrate has been waived.
Therefore, I must determine whether the Release covers
the fees Bain now demands, and, if it does, whether the Jackson
parties had a duty to disclose the status of those deals at the
time Bain signed the release.2
The Release, which the parties agree is governed by New
York law, states that Jackson “shall render a payment made
payable to you in the amount of [$488,820.05] as full and final
satisfaction of any all [sic] monies, known or unknown, to be
owed to you by the Jackson Parties with respect to any and all
agreements whether verbal or written that you may have entered
into with the Jackson Parties from the beginning of time until
December 27, 2007.” [#27-2 at 20].
Bain argues that this language does not preclude her
from seeking a finder’s fees pursuant to the PSA, because she
intended the Release to cover only specific, past-due cash
disbursements, loans, credit card bills, and consultant fees, in
the amount of $488,820.05. As evidence of her intent, she cites
2 The “tender back doctrine” is not applicable here, where Bain is indisputably entitled to the payment she retained, and where that amount would be credited to the defendants if Bain were to succeed in her claim. See Goldfarb v. Wright, 40 N.Y.S.2d 705, 707-709 (N.Y. App. Div. 1943).
- 4 - her hand-written edits to the Release, itemizing the payments she
intended to release, [#27-2 at 20], and she explains that
Jackson’s attorney, Frank Salzano, represented, in his 12/03/07
email, that the Release was necessary “to clean all past debts
and liabilities of Mr. Jackson,” [#60-2].
Under New York law, the rule is that “a valid release
which is clear and unambiguous on its face and which is knowingly
and voluntarily entered into will be enforced as a private
agreement between the parties,” even if one of the parties claims
he intended a narrower release. See, e.g., Chaudhry v. Garvale,
262 A.D.2d 518, 519 (N.Y.A.D. 2 Dept, 1999). Because I find no
ambiguity in the language of Bain’s Release, I may apply it
without considering Bain’s testimony about her
intent. Consolidated Edison, Inc. v. Northeast Utilities, 332
F.Supp.2d 639, 647 (S.D.N.Y. 2004). The Release unambiguously
covers “all monies, known or unknown,” owed under “any and all
agreements whether written or verbal.” (emphasis added) That
release language covers Bain’s claims about the Thriller deal,
the Grammy ceremony, the AEG project, and the SONY/ATV
refinancing, no matter what stage they were in when the release
was signed.
But Bain goes on to argue that, even if the Release
does cover her claims, it is void because she was fraudulently
- 5 - induced to sign it, or, alternatively, because she was mistaken
as to is effect.
To establish fraud-in-the-inducement under New York
law, Bain must prove that the Jackson parties (1) made a material
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
Raymone K. Bain, et al., : : Plaintiffs, : : v. : Civil Action No. 09-0826 (JR) : MICHAEL J. JACKSON, et al., : : Defendants. :
MEMORANDUM
Prior to Michael Jackson’s death in June 2009,
Raymone K. Bain brought this case against him and his production
company, MJJ Productions, Inc., asserting claims for breach of
contract, quantum meruit, and unjust enrichment. Bain became
Jackson’s publicist in December 2003, but the suit arises out of
the expanded role Bain took in Jackson’s affairs beginning in the
middle of 2006. On May 30, 2006, Jackson signed a Personal
Services Agreement (“PSA”), drafted by Bain, that entitled Bain
to a ten percent finder’s fee for any agreement Jackson entered
that she or her associates generated. [#3-1]. Around this time,
Jackson also hired Bain as his personal General Manager, [#3-2],
and as his agent to review and approve music usage requests, [#3-
3].
Bain alleges that she initiated negotiations for
several projects on Jackson’s behalf in early 2007, including:
(1) a project with SONY Music to promote the 25th anniversary of
Jackson’s Thriller album release (“Thriller deal”); (2) Jackson’s participation at the 2008 Grammy Awards ceremony; (3) a project
with the Anschutz Entertainment Group, Inc. for development of
the Neverland Valley Ranch, recording and film projects, and live
performances at the O2 Arena in London (“AEG project”); and
(4) Jackson’s refinancing of his loan against the SONY/ATV music
catalog (“SONY/ATV refinancing”).1 Shortly after the
refinancing, but before the other projects were finalized,
Jackson abruptly cut ties with Bain, without paying the ten
percent finder’s fee on any of Bain’s projects. Because Jackson
ultimately cemented the agreements and earned money on them in
2008, Bain believes she is now entitled to a ten percent finder’s
fee for each deal pursuant to the PSA. She seeks $44 million in
damages, plus attorney’s fees and costs. [#3]
On June 18, 2009, the Jackson parties moved to dismiss
Bain’s claims, arguing that Bain’s suit was barred by a release
she signed on December 27, 2007 that discharged the Jackson
parties from any future claims and payments. [#24]. Jackson
died eight days later, on June 26, 2009. I stayed further
proceedings pending the appointment of an executor for Jackson’s
estate. I also notified the parties that the motion to dismiss
would be treated as a motion for summary judgment and invited
1 Bain also attempts to take credit for another deal – one involving use of Jackson’s music in a Vitamin Water advertisement aired during the Superbowl [#49] - but I have denied her motion to amend her complaint. [#50]
- 2 - them to submit all additional material pertinent to the motion.
[#31]. I dissolved the stay on November 20, 2009. The parties
then filed supplemental briefing and affidavit testimony
regarding the release and addressing Bain’s new allegation that
the release was fraudulently obtained. [#48, #54, #59, #60,
#61].
The Jackson parties replied with their own new
(alternative) argument – that the binding arbitration clause in
the Release requires dismissal or a stay in this case. Under New
York law, the contractual right to arbitrate may be waived, when
the requesting party “engaged in litigation to such an extent as
to manifest[] a preference clearly inconsistent with [its] later
claim that the parties were obligated to settle their differences
by arbitration and thereby elected to litigate rather than
arbitrate.” See, e.g., Les Constructions Beauce-Atlas, Inc. v
Tocci Bldg. Corp. of New York, Inc., 294 A.D.2d 409, 410 (N.Y.
App. Div. 2002) (internal quotations omitted). To avoid waiver,
a party must raise its desire to arbitrate promptly and must
decline to avail itself of pre-trial discovery and other attempts
to litigate on the merits. Id.
The Jackson parties’ first filing did not raise the
arbitration issue. Rather, they elected to address the merits of
Bain’s claim, and did not invoke their right to arbitration -
presumably realizing that the case would not be resolved quickly
- 3 - on the merits - until filing a reply brief on the motion to
dismiss on July 10, 2009. [#29, at 4-6]. I find that the
Jackson parties’ initial filings invoked the judicial process to
such an extent that their right to arbitrate has been waived.
Therefore, I must determine whether the Release covers
the fees Bain now demands, and, if it does, whether the Jackson
parties had a duty to disclose the status of those deals at the
time Bain signed the release.2
The Release, which the parties agree is governed by New
York law, states that Jackson “shall render a payment made
payable to you in the amount of [$488,820.05] as full and final
satisfaction of any all [sic] monies, known or unknown, to be
owed to you by the Jackson Parties with respect to any and all
agreements whether verbal or written that you may have entered
into with the Jackson Parties from the beginning of time until
December 27, 2007.” [#27-2 at 20].
Bain argues that this language does not preclude her
from seeking a finder’s fees pursuant to the PSA, because she
intended the Release to cover only specific, past-due cash
disbursements, loans, credit card bills, and consultant fees, in
the amount of $488,820.05. As evidence of her intent, she cites
2 The “tender back doctrine” is not applicable here, where Bain is indisputably entitled to the payment she retained, and where that amount would be credited to the defendants if Bain were to succeed in her claim. See Goldfarb v. Wright, 40 N.Y.S.2d 705, 707-709 (N.Y. App. Div. 1943).
- 4 - her hand-written edits to the Release, itemizing the payments she
intended to release, [#27-2 at 20], and she explains that
Jackson’s attorney, Frank Salzano, represented, in his 12/03/07
email, that the Release was necessary “to clean all past debts
and liabilities of Mr. Jackson,” [#60-2].
Under New York law, the rule is that “a valid release
which is clear and unambiguous on its face and which is knowingly
and voluntarily entered into will be enforced as a private
agreement between the parties,” even if one of the parties claims
he intended a narrower release. See, e.g., Chaudhry v. Garvale,
262 A.D.2d 518, 519 (N.Y.A.D. 2 Dept, 1999). Because I find no
ambiguity in the language of Bain’s Release, I may apply it
without considering Bain’s testimony about her
intent. Consolidated Edison, Inc. v. Northeast Utilities, 332
F.Supp.2d 639, 647 (S.D.N.Y. 2004). The Release unambiguously
covers “all monies, known or unknown,” owed under “any and all
agreements whether written or verbal.” (emphasis added) That
release language covers Bain’s claims about the Thriller deal,
the Grammy ceremony, the AEG project, and the SONY/ATV
refinancing, no matter what stage they were in when the release
was signed.
But Bain goes on to argue that, even if the Release
does cover her claims, it is void because she was fraudulently
- 5 - induced to sign it, or, alternatively, because she was mistaken
as to is effect.
To establish fraud-in-the-inducement under New York
law, Bain must prove that the Jackson parties (1) made a material
representation or omission which was false and known to be false
(2) for the purpose of inducing her to rely on it, and (3) that
Bain reasonably relied upon it in entering the agreement (4) to
her detriment. See, e.g., Lama Holding Co. v. Smith Barney,
Inc., 88 N.Y.2d 413, 421 (N.Y. 1996). Where the claim is that
the defendant fraudulently concealed a material fact to procure
the agreement, the plaintiff must show that the defendant had a
duty to disclose the concealed information. See, Sitar v. Sitar,
61 A.D.3d 739, 741 (N.Y. App. Div. 2009). Absent a fiduciary
relationship between the parties, a duty to disclose arises only
where one party possesses superior knowledge of essential facts
that makes a transaction inherently unfair – if those facts are
not disclosed, those facts are not readily available to the other
party, and the first party knows that the second party is acting
on the basis of mistaken knowledge. UniCredito Italiano SPA v.
JPMorgan Chase Bank, 288 F.Supp.2d 485, 497 (S.D.N.Y. 2003).
Bain’s own complaint demonstrates why the Jackson
parties had no duty of disclosure. It paints a picture of Bain
as a savvy business woman who founded her own public relations
firm, has represented “many high profile public figures in the
- 6 - sports, entertainment and political fields,” was responsible for
essentially all of Jackson’s affairs for a period of time,3 and
in fact “spoke to [him] several times a day” during that time.
[#3 at ¶¶ 2,7-11, 18-41]. For the deals at issue here, Bain
alleges more than minor involvement; she claims that she played
an integral and substantial role in negotiating all of them. Id.
Bain clearly knew that various deals were in the works - in fact,
she admits to initiating them and participating in on-going
discussions about them - and she does not explain why, given her
relationships with the parties involved, she could not readily
have discovered the status of the agreements before signing the
Release. Thus, the Jackson parties had no duty to disclose the
status of the projects on which Bain bases her claims, nor, if
there were any omissions, was it reasonable for Bain to rely on
3 Bain appears to take credit for saving Jackson from financial and legal ruin. If her recitation of the services she performed for Jackson is to be believed, she must have been more knowledgeable about Jackson’s business than he was. She claims that, among other things, she was responsible for hiring a creative manager for Jackson (¶ 20); she hired a legal and accounting team (¶ 21); she facilitated an audit of Jackson’s finances (¶ 22); she averted imminent foreclosures of his properties (¶ 23); she arranged Jackson’s day-to-day housing and living requirements (¶ 24); she hired a new personnel company to pay Jackson’s employees (¶ 25); she approved music usage requests that generated over ten million dollars in annual income for Jackson (¶ 26); she supervised a team of accountants to address complaints lodged with the California Department of Labor (¶ 27); and she was responsible for paying Jackson’s creditors and other bills (¶ 28).
- 7 - them.4 See Banque Franco-Hellenique de Commerce Intern. et
Maritime, S.A. v. Christophides, 106 F.3d 22, 27 (2d Cir. 1997)
(the defrauded person need not exercise due diligence, but
reliance is not justifiable where the defrauded party exercised
minimal diligence despite being “placed on guard or practically
faced with the facts”).
For the same reasons, Bain’s argument that the Release
is voidable under the doctrine of mistake must be rejected. It
is illogical to believe that the Jackson parties knew or should
have known that Bain was unaware of the deals - a showing that is
required to prove unilateral mistake. See, e.g., Kraft Foods,
Inc. v. All These Brand Names, Inc., 213 F.Supp.2d 326, 330
(S.D.N.Y. 2002).
Bain’s equitable theories of recovery - quantum meruit
and unjust enrichment - also fail. As to Jackson’s estate, Bain
concedes that the PSA is a valid contract, which precludes relief
under those theories. See, e.g., Bloomgarden v. Coyer, 479 F.2d
201, 210 (D.D.C. 1973). As to MJJ Productions, Bain provides no
support for her contention that her efforts conferred a benefit
on MJJ Productions that it unjustly retained, nor does she
describe circumstances that would have reasonably notified MJJ
4 Because I find the Jackson parties had no duty to disclose the status of the deals, Bain’s request, pursuant to Rule 56(f), for discovery on this topic and other irrelevant issues is denied.
- 8 - Productions of her expectation that she would be paid. In fact,
Bain provides virtually no explanation of what or who MJJ
Productions is; or how it is related to this suit; or whether she
even interacted with it during her negotiations. Such a claim
without any support or reasonable likelihood of finding support
through discovery cannot withstand summary judgment.
An appropriate order accompanies this memorandum.
JAMES ROBERTSON United States District Judge
- 9 -