| Telerep, LLC v U.S. Intl. Media, LLC |
| 2010 NY Slip Op 04627 [74 AD3d 401] |
| June 1, 2010 |
| Appellate Division, First Department |
| Telerep, LLC, et al., Appellants, v U.S. InternationalMedia, LLC, et al., Respondents. |
—[*1]
Order, Supreme Court, New York County (Charles E. Ramos, J.), entered August 11, 2009,which granted defendants' motion to dismiss the complaint pursuant to CPLR 3211 (a) (7),unanimously reversed, on the law, without costs, the motion denied, and the complaintreinstated.
Plaintiffs are national sales representatives for the sale of commercial advertising spotsbroadcast on their clients' television stations located throughout the United States. Plaintiffs sellnational commercial spots to various media buyers who purchase air time on behalf of theirclient advertisers; local advertising time is sold by the television stations themselves. Defendantsare media buyers.
Plaintiffs entered into 84 contracts with various television stations. These contracts providethat plaintiffs shall act as the station's "sole and exclusive national sales representative for thesale of all of STATION'S time . . . for advertising purposes, excluding only [localsales] advertising."[FN*]The stations agreed that they would not "engage or use the services of any persons, firm orcorporation other than [plaintiffs] in the sale of NATIONAL SPOT ADVERTISING."
Plaintiffs brought this action against defendants for tortious interference with contract andunfair trade practices. According to the complaint, defendants embarked on a campaign to induceand pressure the stations to sell national advertising spots directly to them in breach of thestations' obligations under the contracts. Defendants persisted, despite being warned that thestations' direct sales of national spots violated the exclusivity provisions of their contracts withplaintiffs. The complaint alleges that as a result of defendants' interference, the stations breachedtheir contracts with plaintiffs, causing them to lose commissions and goodwill.
To plead a claim for tortious interference with contract, a plaintiff must allege, inter alia,actual breach of a contract between the plaintiff and a third party (Lama Holding Co. v SmithBarney, 88 NY2d 413, 424 [1996]). Defendants maintain that the complaint does not allegea breach because the contracts do not bar direct sales of national spots by the television stationsthemselves but only prohibit sales by competing sales representatives. Plaintiffs, on the otherhand, argue that, read as a whole, the contracts prohibit direct sales of national air time by thestations. In the alternative, plaintiffs contend that the contracts are ambiguous.
"A contract is unambiguous if the language it uses has a definite and precise meaning,unattended by danger of misconception in the purport of the [agreement] itself, and concerningwhich there is no reasonable basis for a difference of opinion" (Greenfield v PhillesRecords, 98 NY2d 562, 569-570 [2002] [internal quotation marks and citation omitted]). Acontract is ambiguous if "on its face [it] is reasonably susceptible of more than oneinterpretation" (Chimart Assoc. v Paul, 66 NY2d 570, 573 [1986]). If the court concludesthat a contract is ambiguous, it cannot be construed as a matter of law, and dismissal underCPLR 3211 (a) (7) is not appropriate (see Hambrecht & Quist Guar. Fin., LLC v El Coronado Holdings, LLC,27 AD3d 204 [2006]).
We find that these contracts are ambiguous as to whether they prohibit direct sales ofnational air time by the stations. First, although the agreements provide that plaintiffs areexclusive sales representatives, there is no provision that explicitly bars the stations themselvesfrom selling national air time directly to buyers. Moreover, as defendants point out, the contractsprovide that plaintiffs are entitled to commissions on national advertising sales "whether saidcontracts are written or obtained by [plaintiffs] or not." This language, together with the absenceof a prohibition on direct sales, can be read as permitting the stations themselves to sell nationaladvertising time as long as they pay plaintiffs a commission on the sales.
Other provisions of the contract, however, can reasonably be interpreted as prohibiting directsales by the stations. First, the contracts require the stations to forward to plaintiffs "all orders forNATIONAL SPOT ADVERTISING received directly by STATION." In addition, the stationagrees "to notify [plaintiffs] promptly when anyone makes a direct approach to STATION to buyNATIONAL SPOT ADVERTISING time, and to notify that prospective buyer that all suchpurchases will be made through [plaintiffs] and that contracts for all such orders will be issuedby [plaintiffs]." Plaintiffs persuasively argue that it makes no sense that the stations would haveto forward all orders directly received, and to tell such prospective buyers that the station cannotmake a direct sale, yet then allow the stations to do just that.
The cases cited by defendants do not require a different result. All of the cases involve adispute over a real estate broker's right to a commission and do not address the precise questionpresented here—whether certain language in a sales representative contract, as a matter oflaw, prohibits direct sales by the principal.
Because we find that the contracts here are reasonably susceptible of more than oneinterpretation and thus are ambiguous, the complaint should not have been dismissed pre-answerbefore the development of a full factual record as to the parties' intent (see Hambrecht &Quist Guar. Fin., LLC v El Coronado Holdings, LLC, supra).Concur—Gonzalez, P.J., Moskowitz, Freedman, Richter and RomÁn, JJ.
Footnote *: The contracts all containsubstantially the same provisions for purposes of this appeal. The quoted language is taken fromone such contract.