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Directv Group, Inc. v. Darlene Investments, LLC

United States District Court, S.D. New York
Sep 27, 2006
05 Civ. 5819 (WHP) (S.D.N.Y. Sep. 27, 2006)

Opinion

05 Civ. 5819 (WHP).

September 27, 2006

Counsel of Record: Michael E. Bauman, Esq., Kirkland Ellis LLP, Los Angeles, CA, Counsel for Plaintiff.

Julie A. North, Esq., Cravath Swaine Moore LLP, Worldwide Plaza, New York, NY, Counsel for Defendant.


MEMORANDUM AND ORDER


Plaintiff The DIRECTV Group, Inc. ("DIRECTV") commenced this diversity action against Defendant Darlene Investments, LLC ("Darlene") alleging breach of contract and seeking specific performance and declaratory relief. Darlene counterclaimed alleging fraudulent inducement. DIRECTV moves for summary judgment dismissing Darlene's counterclaim and holding Darlene liable for breach of contract. For the reasons set forth below, DIRECTV's motion is granted.

DIRECTV styled its motion as one for summary judgment under Fed.R.Civ.P. 56. However, it appears that the motion should be decided under Rule 12(c). See Fed.R.Civ.P. 12(c); In re ELSA Designs, Ltd., 155 B.R. 859 (Bankr. S.D.N.Y. 1993) (treating a summary judgment motion as a motion to dismiss). Darlene is not prejudiced by treatment under Rule 12(c), which cabins the facts to the pleadings and accepts the allegations in Darlene's counterclaim as true. Cf. Kennedy v. Empire Blue Cross Blue Shield, 989 F.2d 588, 592 (2d Cir. 1993) (converting motion to dismiss into summary judgment motion appropriate where plaintiffs were not unfairly surprised, defendant's motion papers sought dismissal on certain grounds, summary judgment was granted on those grounds, and plaintiffs had supplemented the record with exhibits); Kraft Foods N.A., Inc. v. Rockland Dep't of Weights Measures, 2003 WL 554796, at *1 (S.D.N.Y. Feb. 26, 2003) (same).

BACKGROUND

DIRECTV is a Delaware corporation headquartered in California that provides digital broadcasting in the United States, Latin America and the Caribbean. (Answer and Counterclaim, dated Nov. 7, 2005 ("Countercl.") ¶ 2.) Darlene is a Cayman Islands limited liability company and an affiliate of the Ciseneros Group of Companies. (Countercl. ¶ 1.) DIRECTV and Darlene are the sole shareholders of DIRECTV Latin America, LLC ("DTVLA"), which delivers satellite television service to Latin America and the Caribbean. (Countercl. ¶ 5.) DIRECTV has an 85.9% interest in DTVLA while Darlene holds the remaining 14.1%. (Countercl. ¶ 7; Ex. B: Second Amended LLC, ann. A.)

On March 18, 2003, DTVLA filed a Chapter 11 petition in the District of Delaware. (Declaration of R. Alexander Pilmer, dated Jan. 20, 2006 ("Pilmer Decl.") Ex. 2: Bankruptcy Fact Findings.) As part of DTVLA's reorganization, DIRECTV and Darlene entered into a Mutual Release Agreement and Covenant Not to Sue, dated February 24, 2004 (together the "Mutual Release"), releasing each other from all claims related to Darlene's interests in DTVLA. (Countercl. Ex. D: Mutual Release § 2.2.) The forum selection clause specified that any other claims concerning the Mutual Release were to be filed in New York. (Countercl. Ex. D: Mutual Release § 10.)

On October 18, 2004, Darlene filed an action against DIRECTV in Florida state court (the "Florida Action") asserting six claims, including fraudulent inducement of the Mutual Release. (Pilmer Decl. Ex. 5: Florida Court Order.) The Florida court dismissed Darlene's fraudulent inducement claim for improper venue and stayed Darlene's remaining claims pending an arbitration among Darlene, DIRECTV and DTVLA. (Pilmer Decl. Ex. 5: Florida Court Order.) On June 22, 2005, DIRECTV filed this action, contending that Darlene breached the Mutual Release by commencing the Florida Action. Specifically, DIRECTV asserts that the Mutual Release barred any action outside New York and discharged Darlene's fraudulent inducement claim. Darlene answered and asserted a counterclaim for fraudulent inducement essentially reiterating its fraudulent inducement claim in the Florida Action and seeking $1 billion in damages.

Darlene's counterclaim alleges a fraud beginning in 2000 when "DIRECTV . . . commenced preliminary discussions with . . . News Corporation [("News Corp.")] regarding possible business combinations." (Countercl. ¶ 43.) At that time, News Corp. held "a substantial ownership interest" in DTVLA's chief competitor — Sky Latin America ("Sky LA"). (Countercl. ¶ 43.) Because of DIRECTV and Sky LA's relative positions in Latin America, DIRECTV and Darlene believed that "business synergies . . . would inure to a combination of the DTVLA and Sky LA operations." (Countercl. ¶ 43.) Darlene participated in "intensive negotiations with DIRECTV, News Corp., and News Corp. affiliates" to join the "subscriber bases of Sky LA and DTVLA." (Countercl. ¶¶ 39, 44.) During those negotiations, Darlene claims that DIRECTV "sacrifice[d] Darlene's . . . interests . . . to complete the larger deal with News Corp." (Countercl. ¶ 44.)

Darlene contends that DIRECTV abused its control over DTVLA by undermining its competitive position, usurping its business opportunities, and forcing its entry into unfavorable contracts and other disadvantageous financial arrangements. (Countercl. ¶¶ 17-31, 76.) When a merger between DIRECTV and News Corp. appeared imminent, Darlene sought contractual assurances that Darlene's interests would be protected if the merger was consummated. (Countercl. ¶ 48.) As a result, Darlene and DIRECTV orally agreed on May 9, 2001 to a Put Agreement containing a sell-out option exercisable on the consummation of the merger. (Countercl. ¶¶ 48, 49.) Pursuant to the Put Agreement, Darlene could sell its interest in DTVLA to DIRECTV for $200 million in the event that Darlene disapproved of the merger. (Countercl. ¶ 49.) According to Darlene, DIRECTV later repudiated that agreement. (Countercl. ¶ 50.)

Darlene and DIRECTV also entered an April 18, 2003 Master Contribution Agreement ("MCA") concerning the prospective consolidation of DTVLA and Sky LA. (Countercl. ¶ 53.) Under the MCA, DIRECTV received "assurances that it would be permitted to effect the consolidation without [Darlene's] consent." (Countercl. ¶ 53.) In return, DIRECTV agreed to buy Darlene's interest for $200,000,000 if the Sky LA transaction involved an "unfair shift of value" ("Sky Put Right"). (Countercl. Ex. C: MCA, § 6.8(c)(ii), (c)(iv).) The Sky Put Right is currently the subject of a compelled arbitration. (Pilmer Dec. Ex. 5: Florida Court Order.)

On December 22, 2003, News Corp. acquired and assumed full operational control of DIRECTV. (Countercl. ¶ 55.) Thereafter, DIRECTV and Darlene executed the Mutual Release. (Countercl. ¶ 57.) The Mutual Release discharged Darlene's claims relating to its interest in DTVLA, including any claim for repudiation of the Put Agreement. (Countercl. ¶ 57.)

Following execution of the Mutual Release, Darlene asserts that "DIRECTV renewed its efforts to siphon value away from DTVLA" despite its pre-Mutual Release representations that it would deal fairly with DTVLA. (Countercl. ¶¶ 15, 59, 76). Specifically, Darlene alleges that DIRECTV undermined DTVLA's competitive position and shifted business to Sky LA for the benefit of News Corp. by closing DTVLA's Mexican and Brazilian operations and underfunding its management and operating budget. (Countercl. ¶¶ 15, 44, 59.) These actions were purportedly taken at DTVLA's expense to facilitate a consolidation of DTVLA and Sky LA. (Countercl. ¶ 59.) Had DIRECTV revealed its true intentions, Darlene maintains that it would not have entered into the Mutual Release.

DISCUSSION

DIRECTV contends that Darlene's fraudulent inducement counterclaim should be dismissed because it is precluded by the Mutual Release. Darlene counters that its fraudulent inducement counterclaim is not barred because it alleges a fraudulent scheme separate from matters encompassed by the Mutual Release. Darlene also argues that its fraudulent inducement counterclaim is actionable based on a fiduciary duty owed by DIRECTV. Further, DIRECTV seeks to hold Darlene liable for breach of the Mutual Release as a consequence of filing the Florida Action.

DIRECTV has not raised its declaratory judgment claim in its moving papers; however, this memorandum and order moots that claim.

I. Motion to Dismiss Standard

Motions for judgment on the pleadings pursuant to Rule 12(c) are determined in accord with the same standard governing motions to dismiss under Rule 12(b)(6). See Morris v. Schroder Capital Mgmt. Int'l, 445 F.3d 525, 529 (2d Cir. 2006);Greco v. Trauner, Cohen Thomas, LLP, 412 F.3d 360, 363 (2d Cir. 2005). Thus, on Plaintiff's motion, this Court must accept the material facts pled in the counterclaim as true and draw all reasonable inferences in Darlene's favor. See Freedom Holdings v. Spitzer, 357 F.3d 205, 216 (2d Cir. 2004); Grandon v. Merrill Lynch Co., 147 F.3d 184, 188 (2d Cir. 1998). A counterclaim may only be dismissed if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Burnette v. Carothers, 192 F.3d 52, 56 (2d Cir. 1999). (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). In deciding this motion under Rule 12(c), this Court may consider documents referenced in the pleadings as well as documents within the non-movant's knowledge and possession. See Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993).

II. Effect of The Mutual Release

DIRECTV argues that dismissal of Darlene's fraudulent inducement counterclaim is appropriate because the Mutual Release precludes the counterclaim. The Mutual Release provides, in pertinent part:

[Darlene] RELEASES, ACQUITS, AND FOREVER DISCHARGES [DIRECTV] . . . from any and all claims . . . of whatsoever kind or nature, that any of the Darlene Releasing Parties might have because of anything done, omitted, suffered, or allowed to be done by any of the [DIRECTV] Released Parties through the date of this Agreement, WHETHER FORESEEN OR UNFORESEEN, OR WHETHER KNOWN OR UNKNOWN TO THE PARTIES, in connection with the Old DTVLA LLC Agreements and/or the rights and status of any Darlene Releasing Party as a member of the Company, any of their respective investments in the Company and the consequences thereof resulting for any reason whatsoever (the [Released Matters]) . . . Darlene . . . further agrees never to commence . . . any legal action . . . based in whole or in part upon the foregoing . . . Released Matters, [defined as subjects involving the] rights and status of [Darlene] as a member of [DTVLA], any of [its] respective investments in [DTVLA] and the consequences thereof resulting for any reason whatsoever.

(Countercl. Ex. D: Mutual Release § 2.2) (emphasis in original).

Darlene's counterclaim is predicated on DIRECTV's alleged misrepresentations about its post-release abuse of control over DTVLA. Specifically, Darlene contends that DIRECTV's post-release abuse has diminished the value of its investment in DTVLA. Therefore, Darlene's allegations involve Released Matters, as they are based at least partially on its DTVLA interests.

New York law applies under the choice of law provision in the Mutual Release. (Countercl. Ex.D: Mutual Release ¶ 10.) Under New York law, "a valid release constitutes a complete bar to an action on a claim which is the subject of the release. However, a release is treated just as any other contract . . . and may be set aside on the traditional basis of fraudulent inducement, misrepresentation, mutual mistake or duress." C'3 Media Mktg. Group, LLC v. Firstgage Internet, Inc., 419 F. Supp. 2d 419, 429 (S.D.N.Y. 2005) (citing Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991)); see also Goldsmith v. Nat'l Container Corp., 287 N.Y. 443, 440 (1942) (holding that a general release does not bar suits seeking damages for fraud in the inducement of the release itself).

Under appropriate circumstances, a fraudulent inducement claim may be subject to release. See, e.g., Nycal Corp v. Inoco PLC, 166 F.3d 1201, 1202 (2d Cir. 1998); Finz v. Schlesinger, 957 F.2d 78, 83 (2d Cir. 1992); Bellefonte Re Ins. Co. v. Argonaut Ins. Co., 757 F.2d 523, 527-28 (2d Cir. 1985); Alleghany Corp. v. Kirby, 333 F.2d 327, 333 (2d Cir. 1964). When a party releases a claim for fraud, it can later challenge that release for fraudulent inducement only by identifying a separate and distinct fraud from that contemplated by the agreement. Alleghany Corp., 333 F.2d at 333; Finz, 957 F.2d at 83; Bellefonte, 757 F.2d at 527-28. Where the "new" fraud is "a species of the same . . . fraud" underlying the original agreement, the claim is deemed released. Nycal, 166 F.3d at 1202.

Darlene argues that the fraud it alleges is separate from DIRECTV's behavior prior to execution of the Mutual Release. However, Darlene fails to identify any "new" fraud. To the contrary, Darlene's other allegations contradict its argument of separateness, as DIRECTV's alleged mismanagement of DTVLA since the Mutual Release is indistinguishable from its pre-release abuse of control. See Korn v. Franchard Corp., 388 F. Supp. 1326, 1333 (S.D.N.Y. 1975) (declining to set aside a release in a securities fraud case where the fraudulent inducement allegations involved the fraud that prompted the release); A.J. Tenwood Assocs., Inc. v. US Fire Ins. Co., 104 Misc.2d 467, 469, 428 N.Y.S.2d 606, 608 (Sup.Ct. 1980) (refusing to allow same fraudulent scheme underlying the settlement as basis for fraudulent inducement claim of settlement itself). Darlene suspected that DIRECTV had acted in contravention of DTVLA's interests when it executed the Mutual Release. Cf. Irving Trust Co. v. Deutsch, 73 F.2d 121, 126 (2d Cir. 1934) (fraudulent inducement claim lies because no semblance of fraud had surfaced before settlement); Schine v. Schine, 250 F. Supp. 822, 825-26 (S.D.N.Y. 1966) (same). Indeed, Darlene seeks $1 billion in damages — the exact value of the released claims — and admits it is seeking damages for "the loss of value of the Put Agreement and other claims." (Countercl. ¶ 77.) In articulating its damages, Darlene relies on the value of the released claims because of the unavoidable overlap between those claims and its counterclaim. (Countercl. ¶ 77.)

At the time of the Mutual Release, Darlene knew that News Corp. owned Sky LA and contemplated "an eventual combination of the DTVLA and Sky LA businesses." (Countercl. ¶ 53.) Experienced corporate executives negotiated the Mutual Release with the advice and assistance of sophisticated counsel. Therefore, Darlene had ample opportunity to protect itself by contract from continuation of the allegedly fraudulent behavior prior to the Mutual Release. See Lazard Freres Co. v. Protective Life Ins. Co., 108 F.3d 1531, 1543 (2d Cir. 1997) ("[A] substantial and sophisticated player . . . [is under a] . . . duty to protect itself" when entering into a contract.). Matters essential to their agreement should have been included in the Mutual Release.See Bibeault v. Advanced Health Corp., 97 Civ. 6026 (WHP), 2002 WL 24305, at *5 (S.D.N.Y. Jan. 8, 2002) (when sophisticated parties enter integrated contracts, their contract should include all fundamental matters in their agreement); In re Matco-Norco, Inc., 22 A.D.3d 495, 496, 802 N.Y.S.2d 707, 709 (2d Dep't 2005) (parties, not courts, must craft contractual conditions necessary for the parties' protection). In fact, the Mutual Release states that essential matters were included as the parties disclaimed reliance on "any representation or failure to disclose information . . . not contained herein." (Countercl. Ex. D: Mutual Release § 3.)

Because the Mutual Release was bereft of any carve-out for DIRECTV's continued misconduct, Darlene cannot assert a fraudulent inducement claim predicated on the Released Matters.See Alleghany, 333 F.2d at 333-34 (after settling a claim, a party may not pursue litigation to obtain a better outcome). Thus, the Mutual Release bars Darlene's fraudulent inducement counterclaim.

Because the Mutual Release bars Darlene's counterclaim, this Court need not address DIRECTV's alternative argument that Darlene failed to state a claim for fraudulent inducement.

III. Fiduciary Duties

Darlene argues in the alternative that its fraudulent inducement claim is actionable based on DIRECTV's breach of a fiduciary duty arising from what Darlene characterizes as a "joint venture" between the parties to operate DTVLA. However, because Darlene provides nothing more than conclusory statements that a joint venture was formed, its counterclaim for breach of fiduciary duty is insufficient as a matter of law.

"Joint adventurers . . . owe to one another . . . the duty of the finest loyalty." Meinhard v. Salmon, 249 N.Y. 458, 463-64 (1928). To demonstrate that a joint venture has been formed, the following five elements must be satisfied: (1) the parties entered "into a specific agreement to carry on an enterprise for profit"; (2) each party has "control" over the venture; (3) each party makes a "contribution" to the venture; (4) the agreement evidences "their intent to be joint venturers"; and (5) provision is made "for the sharing of both profit and losses." See Dinaco, Inc. v. Time Warner, Inc., 346 F.3d 64, 67-68 (2d Cir. 2003);Itel Containers Int'l Corp. v. Atlanttrafik Express Serv. Ltd., 909 F.2d 698, 701 (2d Cir. 1990). "The absence of any one factor `is fatal to the establishment of a joint venture.'" Kidz Cloz, Inc. v. Officially for Kids, Inc., 320 F. Supp. 2d 164, 171 (S.D.N.Y. 2004) (citation omitted).

Darlene has failed to establish evidence of joint control. "The control deemed essential for a joint venture is power over decision-making." See Stratford Group, Ltd. v. Interstate Bakeries Corp., 590 F. Supp. 859, 863 (S.D.N.Y. 1984); Allen Chase Co. v. White, Weld Co., 311 F. Supp. 1253, 1260 (S.D.N.Y. 1970) ("Perhaps the most important criterion of a joint venture is the joint control or management."). Darlene relinquished the right to object to a DTVLA and Sky LA combination in return for the right to require DIRECTV to purchase its interest in DTVLA. (Countercl. Ex. C: MCA § 6.8.) In ceding power to DIRECTV to unilaterally merge, consolidate, or sell DTVLA, Darlene also ceded joint control. Because Darlene did not possess sufficient control to form a joint venture, no corresponding fiduciary duty arises to maintain Darlene's counterclaim. See McGhan v. Ebersol, 608 F. Supp. 277, 284 (S.D.N.Y. 1985) (a party's inability to exert control over another's decision-making demonstrates that joint control is lacking).

Moreover, Darlene has failed to proffer express evidence of intent. The Mutual Release provides that the MCA and other "Related Documents," namely the Second Amended LLC Agreement, supersede all previous agreements. (Countercl. Ex. D: Mutual Release § 8, Ex. B: Second Amended LLC § 13.10; Countercl. Ex. C: MCA § 1.1, 2.2(e)) Neither agreement uses the term "joint venture." Tully v. Sylvan Lawrence Co., Inc., No. 97 Civ. 5762 (JSM), 1999 WL 60148, at *2 (S.D.N.Y. Feb. 4, 1999) (no intent to form a joint venture shown where the term "joint venture" was not in the parties' contract); see also Solutia, Inc. v. FMC Corp., No. 04 Civ. 3842 (WHP), 2006 WL 2109430, at *12 (S.D.N.Y. July 31, 2006) ("sophisticated parties . . . would not `usually' enter into joint venture[s] involving . . . hundreds of millions of dollars without memorializing every element of their agreement in a writing" (quoting Brown v. Cara, 420 F.3d 148, 154 (2d Cir. 2005)); Indep. Energy Corp. v. Trigen Energy Corp., 944 F. Supp. 1184, 1201 (S.D.N.Y. 1996) (a joint venture is formed expressly by contract, not created by law).

While the term "joint venture" need not be used in the parties' agreement to establish intent, Darlene must demonstrate that the parties mutually agreed to enter a joint venture. See Presbyterian Church of Sudan v. Talisman Energy, Inc., No. 01 Civ. 9882 (DLC), 2006 WL 2602145, at *41 (S.D.N.Y. Sept. 12, 2006); Tully, 1999 WL 60148, at *2 (parties must evidence their intent to enter a joint venture). A party seeking to establish a joint venture must point to language in the agreement or extrinsic evidence establishing intent to form something other than a contractual relationship to operate a company. See Presbyterian, 2006 WL 2602145, at *41 (the fact that parties entered a limited liability company agreement does not establish a joint venture). Darlene has not suggested that the parties even discussed the prospect of forming a joint venture during negotiations. Even if Darlene intended to form a joint venture, that intention alone is insufficient absent reciprocation by DIRECTV. See Presbyterian, 2006 WL 2602145, at *41 ("The fact that [some] members may have viewed their relationship as a joint venture or described it informally as such is insufficient to create an issue of fact on joint venture liability."). Therefore, this Court cannot glean from the record any mutual intent to form a joint venture.

Darlene alternatively argues that a fiduciary duty arose from the parties' Amended LLC Agreement. However, the Second Amended LLC Agreement executed along with the Mutual Release omitted the fiduciary duty provision contained in the Amended LLC Agreement. (Countercl. Ex. A: Amended LLC Agreement, § 14.19; Ex. B: Second Amended LLC Agreement.) While Darlene argues that the Amended LLC Agreement applies for the purpose of determining any fiduciary duty, the Mutual Release specifies that the MCA and the Second Amended LLC supersede all previous agreements. (Countercl. Ex. D: Mutual Release § 8; Countercl. Ex. C: MCA 1.1, 2.2(e); Countercl. Ex. B: Second Amended LLC § 13.10.) Thus, the Second Amended LLC Agreement controls. Contracting parties are free to eliminate fiduciary duties in a limited liability company agreement. See Douzinas v. Am. Bureau of Shipping, Inc., 888 A.2d 1146, 1149 (Del.Ch. 2006) (citing Del. Code Ann. 6 § 18-1101(c)(2)). "Once members exercise their contractual freedom in their limited liability company agreement, they can be virtually certain that the agreement will be enforced in accordance with its terms." Walker v. Res. Dev. Co. Ltd., LLC, 791 A.2d 799, 813 (Del.Ch. 2000) (citation omitted).

Delaware law applies pursuant to the choice of law provision in the Second Amended LLC Agreement for purposes of interpreting this particular Agreement. (Countercl. Ex.B: Second Amended LLC Agreement § 13.8.)

Even if Darlene could establish a fiduciary duty, such a fiduciary relationship is not a means to avoid the preclusive impact of the Mutual Release. A party that releases a fraud claim may not subsequently assert that its fraudulent inducement claim is actionable because the defrauding party violated an independent duty to disclose its fraud. See Alleghany, 333 F.2d at 333-35 (fraudulent inducement claims premised on fiduciary duties will not serve to rescind the parties' settlement agreement); Bellafonte, 757 F.2d at 527-28 (same); Nycal, 988 F. Supp. at 306 (same). Thus, Darlene's fiduciary duty arguments fail to establish an independent basis on which Darlene can circumvent the Mutual Release and assert fraudulent inducement.

IV. Breach of Mutual Release

DIRECTV also seeks to hold Darlene liable on a breach of contract theory. Specifically, DIRECTV contends that Darlene breached the Mutual Release by filing in Florida rather than in New York. The forum selection clause provides in pertinent part:

Each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the state courts of . . . New York and the federal courts . . . located in the State of New York . . . in respect of the interpretation or enforcement of [the Mutual Release] or any damages sustained as a result of failure to comply with any part of [the Mutual Release] . . . Each of the Parties irrevocably agrees that all claims with respect to such action or proceeding shall be heard and determined in such courts. Each of the Parties hereby consents to and grants any such courts exclusive jurisdiction over the person of such Parties and over the subject matter of such dispute.

(Countercl. Ex. D: Mutual Release § 10.)

This plain language requires that any action relating to the Mutual Release be filed in New York. See Mosberg v. Nat'l Prop. Analyst, Inc., 217 A.D.2d 482, 483-84, 630 N.Y.S.2d 51 (1st Dep't 1995) (a court must give effect to the clear and unambiguous language of a release). Darlene filed an action in Florida, not New York. It thereby breached the Mutual Release. (Pilmer Decl. Ex. 5: Florida Court Order.)

Moreover, DIRECTV alleges that Darlene breached the Mutual Release by filing a claim predicated on Released Matters. "Darlene . . . agree[d] never to commence . . . any legal action . . . based in whole or in part upon the . . . Released Matters," which are defined as subjects involving Darlene's rights, status, and investment in DTVLA. (Countercl. Ex. D: Mutual Release § 2.2.) The allegations in Darlene's counterclaim and its fraudulent inducement claim in the Florida Action are virtually mirror images. (Countercl. ¶ 77.) As Darlene alleged in its counterclaim that DIRECTV "renewed" its abusive control of DTVLA after reorganization, Darlene's claim in the Florida Action reiterates the same fraud. (Compl. Ex. C: Florida Complaint ¶ 38.) Since the Mutual Release discharged Darlene's fraudulent inducement counterclaim in this action, it also discharged the Florida fraudulent inducement claim. Thus, the substance of the claim in Florida also breached the Mutual Release.

CONCLUSION

For the foregoing reasons, DIRECTV's motion to dismiss Darlene's counterclaim and to hold Darlene liable for breach of contract is granted.


Summaries of

Directv Group, Inc. v. Darlene Investments, LLC

United States District Court, S.D. New York
Sep 27, 2006
05 Civ. 5819 (WHP) (S.D.N.Y. Sep. 27, 2006)
Case details for

Directv Group, Inc. v. Darlene Investments, LLC

Case Details

Full title:THE DIRECTV GROUP, INC., Plaintiff, v. DARLENE INVESTMENTS, LLC, Defendant

Court:United States District Court, S.D. New York

Date published: Sep 27, 2006

Citations

05 Civ. 5819 (WHP) (S.D.N.Y. Sep. 27, 2006)

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