Brand Squared LLC v. Ryse Up Sports Nutrition, LLC

2024 NY Slip Op 31031(U)
CourtNew York Supreme Court, New York County
DecidedMarch 25, 2024
StatusUnpublished

This text of 2024 NY Slip Op 31031(U) (Brand Squared LLC v. Ryse Up Sports Nutrition, LLC) is published on Counsel Stack Legal Research, covering New York Supreme Court, New York County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brand Squared LLC v. Ryse Up Sports Nutrition, LLC, 2024 NY Slip Op 31031(U) (N.Y. Super. Ct. 2024).

Opinion

Brand Squared LLC v Ryse Up Sports Nutrition, LLC 2024 NY Slip Op 31031(U) March 25, 2024 Supreme Court, New York County Docket Number: Index No. 654218/2023 Judge: Margaret A. Chan Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 654218/2023 NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 03/27/2024

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 49M -------------·--------X BRAND SQUARED LLC INDEX NO. 654218/2023

Plaintiff, MOTION DATE 10/18/2023 - V- MOTION SEQ. NO. MS 001 RYSE UP SPORTS NUTRITION, LLC,

Defendant. DECISION+ ORDER ON MOTION ---------------------X

HON. MARGARET A. CHAN:

The following e-filed documents, listed by NYSCEF document number (Motion 001) 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16 were read on this motion to/for DISMISS

This action arises out of a representation agreement between a licensing agency and its client. Plaintiff Brand Squared LLC (BSQ) and defendant Ryse Up Sports Nutrition, LLC (Ryse) entered an agreement by which plaintiff would negotiate licensing agreements with third-party licensors on defendant's behalf and defendant would pay royalties on all sales resulting from those licensing agreements. Defendant eventually stopped paying royalties and sent plaintiff a letter accusing plaintiff of defaulting on the agreement. Plaintiff responded by commencing this action asserting claims of breach of contract, breach of the duty of good faith and fair dealing, constructive trust, accounting, unjust enrichment, and declaratory judgment. Defendant now moves to dismiss all but the breach of contract claim pursuant to CPLR 3211 [a] [7] for failure to plead all the elements of each cause of action. For the reasons below, defendant's motion is granted.

BackgroundI Plaintiff is a licensing agency that assists clients in creating licensing relationships with third-party licensors (NYSCEF # 2, Complaint, ,r 11). According to the affidavit of plaintiffs managing partner and co-founder, Michael Dresner,

1 Unless otherwise stated, the below allegations are taken from the complaint and are presumed true for the purposes of this motion.

654218/2023 BRAND SQUARED LLC vs. RYSE UP SPORTS NUTRITION, LLC Page 1 of 9 Motion No. 001

[* 1] 1 of 9 INDEX NO. 654218/2023 NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 03/27/2024

plaintiff has "more than two decades of experience in creating license agreements and positioning manufacturers with licensors" and "decades· long relationships with many agencies that manage brand owners" (NYSCEF # 12, Dresner Aff, ,r,r 4-5). Defendant is a sports nutrition company (NYSCEF # 2 ,r 12). Around August 2020, defendant hired plaintiff to "create strategic licensed partnerships, thereby enabling [d]efendant to grow its distribution, rapport with trade buyers, and increase volume shipments and revenues, with products resulting from these licenses" in "an effort to enhance [defendant's] brand" (id ,r 13; NYSCEF # 8, Def. MOL at 1). The parties subsequently entered into a Representation Agreement ("Agreement") on August 10, 2021, back-dating it to August 24, 2020 (NYSCEF # 2 ,r 14). The Agreement was later amended to extend the term to September 1, 2025 (id ,r 25).

Pursuant to the Agreement, plaintiff would negotiate licensing agreements with third-party licensors on defendant's behalf; defendant was prohibited from negotiating directly with any licensors (id ,r,r 15, 16). In exchange, defendant would pay plaintiff royalties equal to 3% of sales of licensed merchandise sold under those license agreements (id ,r,r 15, 18). The Agreement also required defendant to send plaintiff a sales report at the end of each month along with the calculated royalties (id ,r 19). Past-due royalties would accrue interest (id).

Notably, the Agreement requires defendant to pay these royalties for any license agreement made by plaintiff following the effective date, including any amendments, renewals, extensions or modification of the licensing agreements (NYSCEF # 2 ,r,r 15, 22). This provision survives the termination of the Agreement (id. ,r 21). Finally, the Agreement could be terminated if plaintiff materially breaches or defaults. Defendant then sends a written notice informing plaintiff of that breach, and plaintiff has 30 days to cure (id ,r 20).

Everything went smoothly under the Agreement for three years until, according to the Dresner, defendant stopped paying royalties in March 2023 and stopped sending sales reports after May 2023 (NYSCEF # 12 ,r 12). On July 3, 2023, defendant sent plaintiff a default letter that served as its termination of the Agreement; plaintiff, through its counsel, rejected defendant's termination letter because it was not compliant with the terms of the Agreement (NYSCEF # 2 ,r,r 27· 29). Plaintiff sent a follow-up letter on August 1, 2023, that gave defendant more time to pay outstanding royalties totaling $374,877.08, as well as more time to send monthly sales reports for June and July 2023 (id. ,r 32). Defendant did not respond to the letter, invoices for June 2023, nor plaintiffs requests for more information about how plaintiff breached the Agreement (id. ,r,r 31-33). Plaintiff believes that defendant is negotiating directly with licensors in violation of the Agreement (id. ,r 30). Dresner baldly asserts that "[d]efendant is informing Licensors not to contact or interact with [p]laintiff in regard to the License Agreements" (NYSCEF # 12 ,r 24).

654218/2023 BRANO SQUARED LLC vs. RYSE UP SPORTS NUTRITION LLC Page 2 of9 Motion No. 001 '

[* 2] 2 of 9 INDEX NO. 654218/2023 NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 03/27/2024

On August 30, 2023, when defendant failed to pay the back-owed royalties or otherwise respond, plaintiff initiated the current lawsuit asserting six causes of action: (1) breach of contract for failing to pay past due royalties, refusing to pay future royalties, negotiating directly with Licensors, and violating exclusivity provisions in the Agreement; (2) breach of the duty of good faith and fair dealing by "act[ing] for an illegitimate purpose and in bad faith in an attempt to not only retain Royalty Compensation ... due and owing ... but also to undercut [plaintiffs] long-term relationships with the very Licensors that created Licenses with the [d]efendant" (NYSCEF # 2 ,r 41); (3) constructive trust over the past-due royalty monies owed under the Agreement (id. ,r 48); (4) accounting of "all sales of all Licensed Articles related to this Agreement" (id. ,r 53); (5) unjust enrichment; and (6) a declaratory judgment requiring defendant to pay past and future amounts due under the Agreement. Despite its claim that defendant owes $374,877.08 in past· due royalties, plaintiff pleads $35 million in damages (id. ,r,r 39, 43, 58).

Defendant now moves to dismiss all but the breach of contract claim, arguing that the claims are not properly pled and are duplicative of the breach of contract claim (NYSCEF # 8, Deft's MOL). Plaintiff disagrees asserting that defendant's motion is based on defendant's dispute about the Agreement (NYSCEF # 11, Pltfs Opp). In response, defendant asserts that it does not dispute the existence or validity of the Agreement as shown by the fact that defendant did not move to dismiss the breach claim (NYSCEF # 16).

Legal Standard

CPLR 3211(a)(7) provides that a party may move for judgment dismissing one or more causes of action when a pleading "fails to state a cause of action" (CPLR 3211 [a] [7]).

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Cite This Page — Counsel Stack

Bluebook (online)
2024 NY Slip Op 31031(U), Counsel Stack Legal Research, https://law.counselstack.com/opinion/brand-squared-llc-v-ryse-up-sports-nutrition-llc-nysupctnewyork-2024.