Darabont AMCmemo

FILED: NEW YORK COUNTY CLERK 12/16/2019 11:29 PM INDEX NO.
650251/2018
NYSCEF DOC. NO. 130 RECEIVED NYSCEF: 12/16/2019
SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK
----------------------------------------------------------x
:
FRANK DARABONT, FERENC, INC., :
DARKWOODS PRODUCTIONS, INC., and :
CREATIVE ARTISTS AGENCY, LLC, :
: Index No.: 650251/2018
Plaintiffs, :
: Mot. Seq. 007
-against- :
: Part 3 (Cohen, J.)
AMC NETWORKS ENTERTAINMENT
:
LLC, AMC FILM HOLDINGS LLC, AMC
:
NETWORKS INC., STU SEGALL
: Oral Argument Requested
PRODUCTIONS, INC., and DOES 1
:
THROUGH 10,
:
Defendants. :
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MEMORANDUM OF LAW IN SUPPORT OF

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
GIBSON, DUNN & CRUTCHER LLP

200 Park Avenue
New York, New York 10166-0193
(212) 351-4000
Attorneys for Defendants
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FILED: NEW YORK COUNTY CLERK 12/16/2019 11:29 PM INDEX NO. 650251/2018
TABLE OF CONTENTS
PRELIMINARY STATEMENT .................................................................................................... 1
BACKGROUND ............................................................................................................................ 4
A. The Parties Contract to Provide Darabont a Percentage of MAGR. ................................. 4
B. Section 13 of the 2010 Agreement Governs Darabont’s MAGR Participation................. 5
C. The Parties Amend the 2010 Agreement, But Certain Conditional Provisions
Never Take Effect. ......................................................................................................... 6
D. AMC “Furnish[es]” Its MAGR Definition to Darabont, Who Initiates Litigation

Against AMC. ................................................................................................................ 7
ARGUMENT .................................................................................................................................. 8
I. This Court Should Grant Summary Judgment to Defendants on Plaintiffs’

Contract Claims that Are Inconsistent with the Governing Agreement. ........................ 9
A. AMC’s MAGR Definition Governs Plaintiffs’ MAGR Participation. ..................... 9
B. Numerous Contract Claims Conflict with AMC’s MAGR Definition.................... 13
II. This Court Should Grant Summary Judgment on Plaintiffs’ Contract Claim
Based on an Alleged Breach that Never Occurred. ...................................................... 20
III. This Court Should Grant Summary Judgment on Plaintiffs’ Claims Based on
AMC’s Alleged Audit Conduct, Because Plaintiffs Have Not Proven Any
Resulting Damages. ...................................................................................................... 20
IV. This Court Should Grant Summary Judgment on Plaintiffs’ Implied Covenant
Claim as Duplicative of Their Breach of Contract Claim. ............................................ 21
CONCLUSION ............................................................................................................................. 22
ii
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TABLE OF AUTHORITIES
Cases
Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce,

70 A.D.3d 423 (1st Dep’t 2010) ..............................................................................................22
Ashwood Capital, Inv. v. OTG Mgt., Inc.,

99 A.D.3d 1 (1st Dep’t 2012) ....................................................................................................9
Banco Espirito Santo, S.A. v. Concessionaria Do Rodoanel Oeste S.A.,

100 A.D.3d 100 (1st Dep’t 2012) ..............................................................................................9
Darabont v. AMC Network Entm’t LLC,

2018 WL 6448457 (Sup. Ct. N.Y. Cty. Dec. 10, 2018).......................................................4, 11
Ehrlich v. Am. Moninger Greenhouse Mfg. Corp.,

26 N.Y.2d 255 (1970) ................................................................................................................8
Ellington v. EMI Music, Inc.,

24 N.Y.3d 239 (2014) ..............................................................................................................15
FranPearl Equities Corp. v. 123 W. 23rd St., LLC,

164 A.D.3d 1190 (1st Dep’t 2018) ..........................................................................................21
Garrett v. Music Pub. Co. of Am., LLC,

740 F. Supp. 2d 457 (S.D.N.Y. 2010)......................................................................................15
Gas Nat., Inc. v. Iberdrola, S.A.,

33 F. Supp. 3d 373 (S.D.N.Y. 2014)........................................................................................12
Greenfield v. Philles Records,

98 N.Y.2d 562 (2002) ............................................................................................................1, 9
Havell Capital Enhanced Mun. Income Fund, L.P. v. Citibank, N.A.,

84 A.D.3d 588 (1st Dep’t 2011) ..............................................................................................22
L-7 Designs, Inc. v. Old Navy, LLC,

964 F. Supp. 2d 299 (S.D.N.Y. 2013)......................................................................................12
Lexington 360 Assocs. v. First Union Nat’l Bank of N. Carolina,

234 A.D.2d 187 (1st Dep’t 1996) ............................................................................................21
Logan Advisors, LLC v. Patriarch Partners, LLC,

63 A.D.3d 440 (1st Dep’t 2009) ..............................................................................................22
iii
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In re Marshall v. Pittsford Cent. Sch. Dist.,

100 A.D.3d 1498 (4th Dep’t 2012) ..........................................................................................13
Melnitzky v. Sotheby Parke Bernet,

300 A.D.2d 201 (1st Dep’t 2002) ............................................................................................13
N.Y. State Elec. & Gas Corp. v. Aasen,

157 A.D.2d 965 (3d Dep’t 1990) .............................................................................................10
Nat’l Fuel Gas Distrib. Corp. v. Hartford Fire Ins. Co.,

28 A.D.3d 1169 (4th Dep’t 2006) ............................................................................................11
Negron v. Franklin Plaza Apt. Complex,

39 A.D.3d 281 (1st Dep’t 2007) ..............................................................................................20
Oppenheimer & Co., Inc. v. Oppenheim, Appel, Dixon & Co.,

86 N.Y.2d 685 (1995) ..............................................................................................................12
Quadrant Structured Prods. Co., Ltd. v. Vertin,

23 N.Y.3d 549 (2014) ..............................................................................................................11
Russin Beer, Inc. v. Phoenix Beverages, Inc.,

200 A.D.2d 659 (2d Dep’t 1994) .......................................................................................15, 16
Stop & Shop Cos. v. Assessor of the City of New Rochelle,

32 Misc. 3d 496 (Sup. Ct. Westchester Cty. 2011)..................................................................10
Train v. Gen. Elec. Capital Corp.,

8 A.D.3d 192-93 (1st Dep’t 2004) ...........................................................................................21
U.S. Bank v. ILDA, LLC,

2014 WL 4290543 (S.D.N.Y. Aug. 29, 2019) .........................................................................11
U.S. Smokeless Tobacco Mfg. Co., LLC v. City of New York,

703 F. Supp. 2d 329 (S.D.N.Y. 2010)......................................................................................15
Utica Mutual Ins. Co. v. Clearwater Ins. Co.,

906 F.3d 12 (2d Cir. 2018).......................................................................................................12
Viacom Outdoor, Inc. v. Wixon Jewelers, Inc.,

82 A.D.3d 604 (1st Dep’t 2011) ..............................................................................................21
In re Viking Pump, Inc.,

27 N.Y.3d 244 (2016) ..............................................................................................................12
Winsch v. Esposito Bldg. Specialty, Inc.,

48 A.D.3d 558 (2d Dep’t 2008) .................................................................................................9
iv
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Yonkers Ave. Dodge, Inc. v. BZ Results, LLC,

95 A.D.3d 774 (1st Dep’t 2012) ................................................................................................8
Zuckerman v. City of New York,

49 N.Y.2d 557 (1980) ................................................................................................................9
Statutes
21 U.S.C. § 387 ..............................................................................................................................15
Rules
C.P.L.R. 3212...............................................................................................................................1, 8
Treatises
Black’s Law Dictionary .................................................................................................................15
Restatement (Second) of Contracts § 226 cmt.b ............................................................................11
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Defendants AMC Network Entertainment LLC (“AMC Network”), AMC Film Holdings
LLC, AMC Networks Inc., and Stu Segall Productions, Inc. (collectively, “Defendants” or
“AMC”) respectfully submit this memorandum of law in support of their motion for summary
judgment. C.P.L.R. 3212.
PRELIMINARY STATEMENT
Plaintiffs are profit participants in the hit television show The Walking Dead.
Represented by the most sophisticated lawyers and agents in Hollywood, Plaintiffs negotiated
and agreed to accept contract terms that set forth precisely how their profit participation would
be calculated. After the television show became an enormous critical and financial success,
Plaintiffs attempted to re-negotiate their contracts through litigation to achieve a financial
windfall that the contracts do not award. In contrast, Defendants ask this Court to do nothing
more than apply hornbook New York law to “enforce[]” the “clear and unambiguous” contract
language “according to the plain meaning of its terms.” Greenfield v. Philles Records, 98
N.Y.2d 562, 569 (2002). Application of that hornbook legal principle requires dismissal of each
of Plaintiffs’ claims in this case. This Court should grant summary judgment to Defendants.
This case arises out of a written agreement between Plaintiff Frank Darabont, the creator
and initial showrunner of The Walking Dead, and AMC (the “2010 Agreement”).1 The contract
was negotiated for over a year by Darabont’s powerhouse Hollywood agents at Plaintiff Creative
Artists Agency (“CAA”) and lawyers at the elite Jackoway Tyerman firm. Under that contract,
Darabont agreed to render services on The Walking Dead in exchange for fixed per episode
payments (not at issue in this case) and “Contingent Participation” in the form of a percentage of
1
The 2010 Agreement is attached as Exhibit A to the Affidavit of Ken Horowitz dated December 10, 2019. The
contract was originally between Darabont and Stu Segall Productions, the production services company AMC
engaged, but was later assigned to AMC Film Holdings LLC.
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the show’s “Modified Adjusted Gross Receipts” (“MAGR”)—commonly referred to as
“backend” or “profit participation.”2 While MAGR in general terms reflects certain money a
company makes from distributing a show minus the costs of production and distribution, every
entertainment company has its own distinct MAGR formula.
The 2010 Agreement provides in plain terms that AMC’s MAGR formula would govern
Darabont’s profit participation in connection with The Walking Dead: “MAGR shall be defined,
computed and paid by American Movie Classics Company LLC (‘AMC’) in accordance with
AMC’s MAGR definition (which shall be furnished to [Darabont]),” as “modified” by a number
of specific terms Darabont’s representatives were able to secure (e.g., a cap on the “television
distribution fee” AMC can charge). 2010 Agreement § 13(d)(ii) (emphasis added). This
language could not be more clear. Darabont agreed that “AMC’s MAGR [D]efinition” would
govern the calculation of MAGR, and that AMC’s MAGR Definition would be “furnished” to
him. As promised, in February 2011, a few months after the 2010 Agreement was signed, AMC
provided its MAGR Definition to Darabont. AMC has calculated MAGR and made many
millions of dollars in MAGR payments to Darabont and CAA in accordance with that definition
ever since.3 Despite the fact that Plaintiffs cashed their checks and pocketed the millions of
dollars in MAGR payments that AMC made in accordance with that contractually-agreed upon
formula, Plaintiffs now attempt to rewrite the contract to seek even more money.
After initiating related litigation in this Court (Index No. 654328/2013 (the “2013
Action”)) challenging one specific aspect of AMC’s calculation of MAGR that is not at issue
2
Plaintiff CAA secured its own “package deal,” which it negotiated and finalized before finalizing its client
Darabont’s deal, as discussed infra.
3
In 2015, AMC provided Darabont an improved version of its MAGR Definition—due to the most favored
nations (“MFN”) provision in the 2010 Agreement that guarantees Darabont the benefit of any more favorable
MAGR Definition another MAGR participant obtains—and has calculated and paid MAGR in accordance with
that version ever since.
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here, Plaintiffs exercised their audit right contained in AMC’s MAGR Definition, and conducted
an audit of AMC’s books and records. Once they completed that audit, Plaintiffs brought this
second lawsuit in 2018, asserting that AMC breached the 2010 Agreement by calculating MAGR
improperly. Rather than claim that AMC’s calculation of MAGR breaches AMC’s MAGR
Definition, Plaintiffs contend that much of AMC’s MAGR Definition simply does not apply
despite the unambiguous language in the 2010 Agreement stating otherwise.
In other words, Plaintiffs’ breach of contract theory is that the words in the 2010
Agreement—“MAGR shall be defined, computed and paid by [AMC] in accordance with
AMC’s MAGR [D]efinition”—do not mean what they say. 2010 Agreement § 13(d)(ii).
Instead, Plaintiffs seek to use litigation to rewrite the parties’ deal, claiming that MAGR should
actually be defined, computed, and paid according to an unworkable hodgepodge of the parts of
AMC’s MAGR Definition they like (e.g., audit rights)—but not the parts they don’t (e.g.,
distribution fees)—with the gaps filled in with their unilateral views of “industry custom and
practice.” But the 2010 Agreement’s heavily-negotiated, unambiguous terms foreclose
Plaintiffs’ concocted interpretation and their claims. Plaintiffs have admitted as much in a filing
they made last year, conceding that AMC’s MAGR Definition is “incorporated by reference
into” and “intrinsic to” the parties’ 2010 Agreement, Defs.’ Rule 19-A Stmt. of Undisputed Facts
(“SUF”) ¶25, which unambiguously states that “MAGR shall be defined, computed and paid . . .
in accordance with AMC’s MAGR [D]efinition.” There is no legitimate dispute that each of the
MAGR categories Plaintiffs complain of here was defined, computed, and paid in accordance
with AMC’s MAGR Definition. AMC did not breach the parties’ agreement.
This Court should hold that the parties’ 2010 Agreement provides that AMC’s MAGR
Definition governs the calculation of Plaintiffs’ The Walking Dead contingent compensation and
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that Plaintiffs’ claims lack merit. The sophisticated parties to the 2010 Agreement agreed to be
bound by AMC’s MAGR Definition, and AMC has computed and paid Plaintiffs contingent
compensation in accordance with that definition. This Court should grant summary judgment to
Defendants in full.
BACKGROUND
A. The Parties Contract to Provide Darabont a Percentage of MAGR.
Defendants produce and air The Walking Dead. SUF¶1. The show, a one-hour drama
depicting life following a global zombie apocalypse, is currently in its tenth season. Darabont
has not worked on the show since before Season 2 aired (in 2011), when he was terminated
pursuant to a Pay-or-Play clause in his contract.4 SUF¶¶2-3.
In August 2010, the parties signed the 2010 Agreement setting the terms of Darabont’s
services and compensation for The Walking Dead. SUF¶4-5. Darabont agreed to receive (1)
fixed per episode payments and (2) specific, limited, and negotiated rights to “Contingent
Participation” or a percentage of MAGR. Id.; 2010 Agreement § 13; Darabont, 2018 WL
6448457, at *1. Although talent agencies generally receive a percentage commission of a
client’s compensation, here CAA opted instead to negotiate for itself its own “package” deal
with AMC for certain upfront payments and its own percentage of MAGR. SUF¶6. CAA
finalized its agreement with AMC before Darabont’s, which allowed CAA to lock in its own
package fees before completing negotiations for its client. Id.
4
A “pay-or-play” provision is “invoked when an employer wishes to stop working with an employee.” Darabont
v. AMC Network Entm’t LLC, 2018 WL 6448457, at *10 (Sup. Ct. N.Y. Cty. Dec. 10, 2018). The employer can
part ways but must still pay the departed employee. Id. at *10.
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B. Section 13 of the 2010 Agreement Governs Darabont’s MAGR Participation.
The Walking Dead was the first scripted, dramatic television series AMC produced itself.
SUF¶7. AMC was a new entrant to the television production and distribution market, and it was
initially unclear whether AMC would produce The Walking Dead itself or have a third-party
television studio do so. SUF¶¶8-9. Accordingly, Section 13(d) of the 2010 Agreement provided
for MAGR to be calculated differently depending on which production scenario came to pass.
SUF¶¶10-11.
1. Third-Party Production Scenario: “If the Series is produced with a third-party
supplying producer/deficit financer, MAGR shall be defined, computed, and paid in accordance
with the standard definition thereof used by the third-party supplying producer/deficit financier,
subject to good faith negotiation.” 2010 Agreement § 13(d)(i) (emphases added). Thus,
Darabont agreed that if the series were produced with a third-party supplying producer/deficit
financier, he would be bound by that third party’s “standard” MAGR definition but also
expressly reserved the right to engage in good-faith negotiation over that definition. Id.
2. AMC Production Scenario: “If the Series is produced without any third-party
supplying producer/deficit financier, MAGR shall be defined, computed and paid by American
Movie Classics Company LLC (“AMC”) in accordance with AMC’s MAGR definition (which
shall be furnished to Lender #1) . . . .” Id. § 13(d)(ii) (emphases added). Unlike Section
13(d)(i)’s third-party production provision, in Section 13(d)(ii)—the in-house MAGR
provision—Darabont did not reserve any right to negotiate AMC’s MAGR definition. Id. That
distinction makes sense and is dispositive here. Because Darabont was obviously unable to
negotiate with an unknown future third-party producer before he signed the 2010 Agreement, he
reserved the right to do so if a third party was later identified. See id. By contrast, Darabont
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could and did negotiate MAGR terms with AMC before signing the 2010 Agreement. SUF¶¶12-
15.
Specifically, Darabont negotiated with AMC to lock in certain provisions of his MAGR
calculation that mattered to him. Id. After robust negotiation, the parties ultimately agreed that
“for purposes of the calculation of” Darabont’s MAGR “participation hereunder, AMC’s MAGR
definition shall be modified” in nine specific ways. SUF¶15 (quoting 2010 Agreement
§ 13(d)(ii)(A)-(I) (setting forth the modifications)). These modifications obviated any need to
reserve the right to further “good faith negotiation,” SUF¶10 (quoting 2010 Agreement
§ 13(d)(i)); SUF¶11 (quoting 2010 Agreement § 13(d)(ii)). In fact, at the time Darabont signed
the 2010 Agreement, neither he nor his sophisticated agents and lawyers had ever seen AMC’s
MAGR Definition. SUF¶16. These sophisticated parties and counsel, see SUF¶17, had
negotiated for nine specific modifications to AMC’s MAGR Definition, and they deemed that
sufficient. Darabont signed the 2010 Agreement. He cannot now try to change the deal through
litigation.
C. The Parties Amend the 2010 Agreement, But Certain Conditional Provisions
Never Take Effect.
In February 2011, in advance of season 2 of The Walking Dead, the parties amended the
2010 Agreement (the “Season 2 Amendment”). SUF¶18. Among other things, the Season 2
Amendment provides for increased episodic payments and conditional improvements to
Darabont’s MAGR participation. Id.; Ex. 14 § 3(a); SUF¶19.5 Had it taken effect, Section 3 of
the Season 2 Amendment would have amended Section 13(d) of the 2010 Agreement to provide
that “[t]he definition of MAGR shall be as set forth in AMC’s customary MAGR definition, with
5
Unless otherwise designated, citations to Ex. __ are to the Affirmation of Orin Snyder (December 16, 2019).
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such changes as have been agreed in the [2010] Agreement, and subject to such further changes
as may be agreed following good faith negotiation. . . .” SUF¶20 (quoting Season 2 Amendment
§ 3(b)) (emphasis added). Section 3 also would have provided for two further modifications of
AMC’s MAGR Definition, in addition to the nine in the 2010 Agreement, as well as MAGR
advances. Id.
But the Season 2 Amendment’s MAGR modifications were subject to a condition
precedent. They only would take effect “[p]rovided that Artist renders executive
producer/showrunner services on all episodes produced for Season 2 pursuant to this Season 2
Amendment,” id.—services that were required to be “rendered on a full-time and in-person
basis,” Season 2 Amendment § 1(c)(i) (emphasis added). Darabont have now
conceded that he provided no such services after July 2011, when he was removed from his
position in the midst of AMC’s production of Season 2. SUF¶¶22-23.
D. AMC “Furnish[es]” Its MAGR Definition to Darabont, Who Initiates Litigation

Against AMC.
On February 22, 2011—shortly after the parties entered into the conditional Season 2
Amendment—AMC “furnished” its MAGR Definition to Darabont, as the 2010 Agreement
required. SUF¶24. The 16-page MAGR Definition was comprehensive, identifying in careful
detail the formula by which MAGR would be calculated. SUF¶24; Ex. 13 (“2011 MAGR”). It
also provided Plaintiffs with the audit rights that gave rise to this action. SUF¶26.6
In October 2011, eight months after they received AMC’s MAGR definition, to which
they had agreed in the 2010 Agreement to be bound, Plaintiffs initiated efforts to negotiate that
definition. Even though AMC had no obligation to negotiate, compare 2010 Agreement
6
Plaintiffs alleged the 2010 Agreement provided them audit rights, FAC¶19, but have never identified any such
provision. No audit rights exist in the 2010 Agreement itself. SUF¶27.
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§ 13(d)(i), with id. § 13(d)(ii), AMC engaged in negotiations nonetheless, seeking in good faith
to address many of Plaintiffs’ concerns from late 2011 through 2013. SUF¶¶28-34. Plaintiffs
sued AMC anyway in 2013, asserting claims for breach of contract and of the implied covenant
of good faith and fair dealing. SUF¶43. In the midst of that lawsuit, Plaintiffs exercised their
audit rights in the MAGR Definition and conducted an audit of AMC. SUF¶¶35, 40, 90-91.
Concurrently, AMC sent Plaintiffs a revised, more favorable MAGR definition in January 2015,
pursuant to Darabont’s rights under Section 13(d)(iv) of the 2010 Agreement to the benefit of
any other participant’s MAGR definition if it, “taken as a whole,” is better than his definition.
SUF¶38 & Ex. 29 (“2015 MAGR”). That revised MAGR definition was used to calculate
Darabont’s and CAA’s September 30, 2014 MAGR statements—the subject of Plaintiffs’ audit
and this action. SUF¶41. Plaintiffs’ audit of AMC completed in July 2017. SUF¶42.
In January 2018, Plaintiffs filed this action, SUF¶43, ultimately asserting 14 different
theories of breach of contract in one cause of action, FAC¶¶26, 32(a),7 as well as a claim for
breach of the implied covenant of good faith and fair dealing, FAC¶¶34-37. They filed the Note
of Issue on November 1, 2019. Defendants now move for summary judgment.
ARGUMENT
A defendant is entitled to summary judgment upon a prima facie showing that a “cause of
action . . . has no merit.” CPLR 3212(b); Yonkers Ave. Dodge, Inc. v. BZ Results, LLC, 95
A.D.3d 774 (1st Dep’t 2012). In “opposing [a] motion for summary judgment,” it is “incumbent
upon” the non-movant “to do more than merely raise an issue of consideration.” Ehrlich v. Am.
Moninger Greenhouse Mfg. Corp., 26 N.Y.2d 255, 259 (1970). A plaintiff’s “mere conclusions,
7
Plaintiffs voluntarily discontinued the claims asserted in paragraphs 26(d)-(e) and (j) of their First Amended
Complaint. Dkt. No. 128.
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unsubstantiated allegations, or expressions of hope” do not constitute “admissible evidence
showing that a triable issue exists.” Zuckerman v. City of New York, 49 N.Y.2d 557, 598 (1980).
Here, Plaintiffs bring two claims—a breach of contract claim predicated on more than a
dozen theories and a claim for breach of the implied covenant of good faith and fair dealing.
Neither has merit. This Court should rule that the parties’ contract is clear and unambiguous and
grant summary judgment to Defendants on both claims.
I. This Court Should Grant Summary Judgment to Defendants on Plaintiffs’ Contract

Claims that Are Inconsistent with the Governing Agreement.
A party cannot breach a contract by failing to do something the contract does not require.
Winsch v. Esposito Bldg. Specialty, Inc., 48 A.D.3d 558, 559 (2d Dep’t 2008). In defiance of
this clear edict, Plaintiffs seek to hold Defendants liable for breach of contract in that very way—
for failing to calculate MAGR in a manner the contract does not require. This Court should grant
summary judgment, holding that the parties’ 2010 Agreement is unambiguous and dismissing
any theory of breach inconsistent with AMC’s MAGR Definition. See Banco Espirito Santo,
S.A. v. Concessionaria Do Rodoanel Oeste S.A., 100 A.D.3d 100, 107 (1st Dep’t 2012)
(reversing denial of summary judgment motion and dismissing complaint where contract was
unambiguous and defendant acted within its terms).
A. AMC’s MAGR Definition Governs Plaintiffs’ MAGR Participation.
New York law is clear that “a written agreement that is complete, clear and unambiguous
on its face must be enforced according to the plain meaning of its terms.” Greenfield, 98 N.Y.2d
at 569. This law applies “with even greater force in commercial contracts [like this one]
negotiated at arm’s length by sophisticated, counseled businesspeople.” Ashwood Capital, Inv.
v. OTG Mgt., Inc., 99 A.D.3d 1, 7 (1st Dep’t 2012). The 2010 Agreement expressly provides
that if AMC produces The Walking Dead: “MAGR shall be defined, computed and paid in
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accordance with AMC’s MAGR [D]efinition.” 2010 Agreement § 13(d)(ii); SUF¶11. The
mandatory “shall” leaves no room for MAGR to be calculated any other way. See N.Y. State
Elec. & Gas Corp. v. Aasen, 157 A.D.2d 965, 967 (3d Dep’t 1990) (“shall” is “mandatory”);
Stop & Shop Cos. v. Assessor of the City of New Rochelle, 32 Misc. 3d 496, 503-04 (Sup. Ct.
Westchester Cty. 2011) (“mandatory word ‘shall’” “confers” an “unfettered right”). The contract
further provides that AMC “shall furnish[]” “AMC’s MAGR [D]efinition” to Plaintiffs, SUF¶11,
leaving no doubt that, by signing the agreement, Darabont was agreeing to be bound by AMC’s
MAGR definition even though it had not yet been provided to him. This clear, complete, and
unambiguous contract language leads to only one possible outcome: a ruling that AMC’s
MAGR Definition governs.
Plaintiffs’ efforts to circumvent the agreement’s plain terms fail. Although Plaintiffs
have twice conceded that AMC’s MAGR Definition is binding—first by stating the definition
was “intrinsic to” and “obviously . . . incorporated by reference into the [2010] Agreement”
Darabont signed, and thus an enforceable part of that contract, SUF¶25 (first emphasis added),
and second by availing themselves of audit rights set forth in the MAGR Definition itself,
SUF¶¶26, 38—Plaintiffs now say that AMC’s MAGR Definition does not control because AMC
did not negotiate the definition in good faith after it was furnished to Plaintiffs. That argument is
wrong for two fundamental reasons.
First, none of the governing agreements require AMC to negotiate its MAGR Definition
with Plaintiffs. Unlike in Section 13(d)(i) (third party production scenario), in Section 13(d)(ii)
of the 2010 Agreement (AMC production scenario) Darabont did not reserve any negotiation
rights. Section 13(d)(ii) simply says that when AMC produces the series, as it did here, the
calculation of MAGR “shall” be governed by AMC’s MAGR Definition. SUF¶11. Because the
10
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parties adopted a good-faith negotiation right in “one provision” of the contract
(Section 13(d)(i)) “but not in another parallel provision” (Section 13(d)(ii)), this Court should
“presume[] that the drafters acted intentionally and intended a different meaning.” U.S. Bank v.
ILDA, LLC, 2014 WL 4290543, at *3 (S.D.N.Y. Aug. 29, 2019); see Quadrant Structured Prods.
Co., Ltd. v. Vertin, 23 N.Y.3d 549, 560 (2014).8
The Season 2 Amendment provided Plaintiffs with no negotiation rights either. Section
3(b) of the Amendment contemplates good-faith negotiation of AMC’s MAGR Definition, but
only “[p]rovided that artist renders executive producer/showrunner services on all episodes
produced for Season 2 pursuant to this Season 2 Amendment” (emphases added), which services
must be “full-time and in-person.” SUF¶21. Thus, there is a condition precedent to the
operation of this section of the Amendment, see Nat’l Fuel Gas Distrib. Corp. v. Hartford Fire
Ins. Co., 28 A.D.3d 1169, 1170 (4th Dep’t 2006) (“The notice requirement follows the word
‘PROVIDED,’ which indicates creation of a condition”); Restatement (Second) of Contracts
§ 226 cmt.b, and it is undisputed that the condition was never satisfied because Darabont worked
neither “full-time” nor “in-person” on most episodes of season 2. SUF¶¶22-23.9 Consequently,
8
The different language for the two production scenarios made commercial sense. In negotiating the 2010
Agreement, the parties negotiated extensively over specific terms for AMC’s MAGR Definition and AMC
agreed to nine modifications in advance. SUF¶¶12-15. The modifications to AMC’s MAGR Definition that
Plaintiffs cared about were thus already in the 2010 Agreement. That was not the case for the definition of an
unknown potential third party producer, who Plaintiffs were unable to negotiate with in advance.
9
Although Justice Bransten in the 2013 Action—in ruling that the language in Section 1(c)(i) of the Season 2
Amendment did not “apply to the vesting requirements set forth in paragraph 13 of the 2010 Agreement”—
concluded that disputes of fact existed “on [that] record,” as to whether Darabont provided “some full-time, in-
person executive producer/showrunner services,” 2018 WL 6448457, at *15 (emphasis added), the record in
this case as to what services Darabont performed is undisputed. SUF¶23. Moreover, whether Darabont
performed some services is not at issue. Based on the undisputed facts here, Darabont did not perform “full-
time” and “in-person” services on all episodes for Season 2, particularly where he was terminated while editing
the third episode of Season 2’s thirteen. SUF¶23. Even accepting for purposes of this motion that some of
Darabont’s pre-termination services affected later Season 2 episodes, such services cannot possibly satisfy the
contractual standard of “full-time,” “in-person” services for “all episodes.”
11
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Section 3(b) of the Season 2 Amendment and its good-faith negotiation provision never took
effect. Utica Mutual Ins. Co. v. Clearwater Ins. Co., 906 F.3d 12, 22 (2d Cir. 2018);
Oppenheimer & Co., Inc. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 690 (1995).10
Second, even if Plaintiffs had a right to negotiate in good faith before being bound to
AMC’s MAGR Definition (they did not), the undisputed record makes clear that AMC
negotiated the definition in good faith. See SUF¶¶12-15, 28-39, 44. AMC discussed its MAGR
Definition with Plaintiffs extensively, exchanged several mark-ups, accepted certain requested
and negotiated modifications, and even included more favorable terms in the revised 2015
MAGR Definition. See SUF¶44; Ex. 30 at 6.11 This is the definition of good-faith negotiation;
AMC’s refusal to accept all of Plaintiffs’ requests, SUF¶¶29, 39, is not bad faith. L-7 Designs,
Inc. v. Old Navy, LLC, 964 F. Supp. 2d 299, 307 (S.D.N.Y. 2013) (“[A] party does not act in bad
faith merely because, in the end, it refuses to capitulate to the other side’s demands,” and “self-
interest is not bad faith.”); Gas Nat., Inc. v. Iberdrola, S.A., 33 F. Supp. 3d 373, 382 (S.D.N.Y.
2014). Indeed, Section 3(b) of the Season 2 Amendment even if operative does not render
AMC’s MAGR definition “subject” to good-faith negotiation, SUF¶10, but rather only reflects
that “further changes [] may be agreed following good faith negotiation,” SUF¶20 (emphasis
added)—not that they must.
In short, Plaintiffs agreed to be bound by AMC’s MAGR Definition, subject only to the
modifications expressly enumerated in the 2010 Agreement. Plaintiffs had no right to
10
Section 1(c)(iii) of the Season 2 Amendment does not provide any right to negotiate AMC’s MAGR Definition
independent of the conditional rights in Section 3(b). Any suggestion Section 1(c)(iii) imposes independent
good-faith negotiation requirements on AMC would vitiate the condition precedent in Section 3(b)—
impermissibly rendering that clause surplusage. In re Viking Pump, Inc., 27 N.Y.3d 244, 257 (2016).
11
AMC further gave Plaintiffs substantial concessions when paying contingent compensation, including a tax
credit offset that equated to more than $99 million in additional value to Plaintiffs’ MAGR as of March 2017.
SUF¶¶36-37.
12
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subsequently negotiate AMC’s MAGR Definition, though AMC did in fact negotiate that
definition with Plaintiffs in good faith. Even more, Plaintiffs relied upon that definition—
specifically, the enumerated audit rights—to bring this very action. SUF¶¶26, 38. Plaintiffs’
attempt now to evade that definition should be rejected. In re Marshall v. Pittsford Cent. Sch.
Dist., 100 A.D.3d 1498, 1500 (4th Dep’t 2012) (“Parties cannot accept benefits under a contract
fairly made and at the same time question its validity.” (citations omitted)); Melnitzky v. Sotheby
Parke Bernet, 300 A.D.2d 201, 202 (1st Dep’t 2002). This Court should hold that the parties’
2010 Agreement is clear and unambiguous on whether AMC’s MAGR Definition governs. It
does.
B. Numerous Contract Claims Conflict with AMC’s MAGR Definition.
Although Plaintiffs challenge nearly a dozen of AMC’s MAGR accounting practices,
Plaintiffs have failed to identify the source of their breach of contract claim. In fact, each
challenged accounting practice is consistent with AMC’s MAGR Definition, meaning AMC
cannot be held liable for breach of contract.
Plaintiffs’ response appears to be that, despite the unambiguous language of the 2010
Agreement, no MAGR formula governs Darabont’s contingent participation. They contend that
AMC’s MAGR Definition somehow is invalid because it breaches the 2010 Agreement and the
Season 2 Amendment, although Plaintiffs have not identified a single accounting practice that
conflicts with those documents. SUF¶44. In the absence of a governing MAGR Definition,
Plaintiffs claim Darabont’s MAGR should be calculated pursuant to some amalgamation of the
“implied covenant of good faith and fair dealing, industry custom and practice,” and a version of
AMC’s MAGR Definition that Darabont’s counsel unilaterally marked up. Id. But calculating
MAGR based on this hodgepodge of ill-defined sources simply makes no sense: these
sophisticated parties did not and would never have left something so important as the calculation
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of MAGR subject to subjective standards of “custom and practice.” Plaintiffs’ position in fact
suggests that no agreement on MAGR exists, which begs the question of how they can maintain
any claim for breach of any express term of a contract at all.12
At bottom, Plaintiffs’ theories of breach conflict with AMC’s MAGR Definition, and that
definition—which Plaintiffs already admitted is part of and incorporated into the parties’ 2010
Agreement, SUF¶25—governs. This Court should grant summary judgment as to each of
Plaintiffs’ breach of contract theories.
1. Home Video Distribution. Plaintiffs claim AMC breached the 2010 Agreement by
charging 20% distribution fees on home video receipts from sub-distributors who retain their
own distribution fees. FAC¶26(b). But AMC’s MAGR Definition expressly allows this 20%
distribution fee. SUF¶46. AMC never agreed that its home video distribution fee would be
inclusive of a sub-distributor’s fee. In fact, in negotiations Plaintiffs requested that all AMC
distribution fees be inclusive of sub-distributor fees, but, AMC agreed to that arrangement only
for its television distribution fee. SUF¶¶47-53. When AMC was willing to adopt such an
arrangement it expressly said so; it did not do so for home video distribution. Compare 2015
MAGR § I.B.2(g), with 2010 Agreement § 13(d)(ii)(A) (providing “AMC’s television
distribution fee shall be capped at ten percent (10%) and shall be inclusive of all sub-
distributor . . . fees” (emphases added)). AMC has not breached by charging the 20%
distribution fees that the MAGR Definition expressly allows.
12
Plaintiffs assert Defendants breached the implied covenant of good faith and fair dealing only by delaying the
audit and “by refusing to disclose the agreements of other TWD profit participants to the Auditors.” FAC¶36.
Tellingly, Plaintiffs have brought no claim in this case asserting that AMC’s MAGR Definition or accounting
practices violate the implied covenant. All they can argue here, then, is that AMC’s accounting practices
somehow violates an express term of some governing agreement. They do not.
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2. Electronic Sell Through (“EST”). The MAGR Definition states that if AMC
“distribute[s]” episodes of The Walking Dead “directly,” AMC shall be “deemed to have
received Gross Receipts in an amount equal to [20%] of Wholesale CVD Receipts,” not 100% of
those receipts. SUF¶54 (quoting 2015 MAGR Def. I.B.1(a)(iii)).13 That is AMC’s practice. See
SUF¶¶59-62. But Plaintiffs claim AMC underreported revenue derived from Apple iTunes EST
sales because AMC incorrectly treated those sales as “a direct distribution by AMC” on the
theory that “Apple, not AMC, is distributing TWD via iTunes.” FAC¶26(a).
Distributors and retailers are very different, as the MAGR Definition’s text makes clear.
See, e.g., 2015 MAGR §§ I.A(14), I.B.1(a)(iii), III.B; see also 2010 Agreement § 13(d)(iii)
(recognizing AMC may have affiliated “retail outlets” and distinct “video device distributors”).
A distributor is “[a] wholesaler, jobbor, or other manufacturer or supplier that sells chiefly to
retailers and commercial users,” Distributor, Black’s Law Dictionary (11th ed. 2019); a retailer
“sell[s] personal property to the public or to consumers,” Retailer, Black’s Law Dictionary (11th
ed. 2019) (emphasis added). See Ellington v. EMI Music, Inc., 24 N.Y.3d 239, 342 (2014)
(“‘The words and phrases used by the parties must, as in all cases involving contract
interpretation, be given their plain meaning.’”) (citations omitted); Garrett v. Music Pub. Co. of
Am., LLC, 740 F. Supp. 2d 457, 462 (S.D.N.Y. 2010) (construing contract in accord with plain
meaning of terms as defined in Black’s Law Dictionary).14
13
“Wholesale CVD Receipts” are defined as receipts from “Consumer Video Devices,” including “electronic sell
through,” the mode of distribution through iTunes. SUF¶45, 54.
14
State and federal statutes reflect the plain meaning of the word “distributor” as an entity that sells products to
retailers and not end-consumers. See U.S. Smokeless Tobacco Mfg. Co., LLC v. City of New York, 703 F. Supp.
2d 329, 338 (S.D.N.Y. 2010) (quoting 21 U.S.C. § 387(14) (defining “retailer”)); Russin Beer, Inc. v. Phoenix
Beverages, Inc., 200 A.D.2d 659, 660 (2d Dep’t 1994) (referring to state statute defining “dealer” as seller to
consumers and “distributor” as seller “to a dealer”); N.Y. Gen. Bus. § 199-a (defining “Distributor” as sellers of
products to “dealers,” as distinct from “retailer[s]” who sell products “to the consuming public for the purposes
other than resale”); N.Y. Veh. & Traf. § 462 (similar); N.Y. Tax § 420 (similar).
15
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product integration lets companies advertise their products. SUF¶66. As such, product
integration receipts are “advertising revenues.” Consequently, product integration receipts are
not to be included as a Gross Receipt. 2015 MAGR § 1.B.1(b)(iv) (excluding “advertising
revenues”). No contract provision provides otherwise.
4. Merchandising Distribution. Plaintiffs claim that AMC breached the 2010
Agreement by taking a 50% distribution fee on merchandising receipts while also charging as
distribution expenses fees paid to Striker Entertainment, LLC, AMC’s merchandising agent. See
FAC¶26(f). But AMC’s MAGR Definition expressly lets AMC take “fifty percent (50%) of the
Gross Receipts derived from the exercise of Ancillary Rights,” which the MAGR Definition
defines to include “Merchandising . . . Rights in the Program.” SUF¶67, 77 (quoting 2015
MAGR Def. §§ I.B.1(a)(iv), I.B.2(h)). Similarly, the fees paid to Striker to source and generate
merchandising deals are properly deductible as “Distribution Charges,” which constitute “all
direct, out-of-pocket costs, expenses and charges . . . paid, allocated, advanced or incurred by
reason of, in connection with, or relative to the derivation of Gross Receipts with respect to” The
Walking Dead. SUF¶¶68-70; 2015 MAGR § I.B.3. The MAGR Definition expressly permits
AMC to deduct those fees and expenses.
5. Service Providers. Plaintiffs claim AMC breached the 2010 Agreement by deducting
fees paid to counsel, a data security firm, a consultant, and outside participants—fees Plaintiffs
aver AMC should “absorb[].” FAC¶26(h). Not so. AMC’s MAGR Definition provides that
such fees paid to third parties are properly included as “Distribution Charges” (“charges . . .
incurred by reason of, in connection with, or relative to the derivation of Gross Receipts”) or
“Direct Charges” (“costs of developing and producing the Program . . . including . . . outside
legal and accounting fees”) to be deducted as part of the MAGR calculation. SUF¶71-72. In
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fact, the agreement expressly provides that numerous forms of external legal fees are deductible,
SUF¶¶72-73 (quoting MAGR provisions specifying outside legal and accounting fees
deductible), and the definition even contains a catchall for “out-of-pocket costs not elsewhere
denominated in this Section I.B.3 which are incurred by AMC in connection with the
exploitation of the Program in any and all media throughout the universe,” 2015 MAGR
§ I.B.3(q). Further, deductible “Distribution Charges shall include, without limitation, any such
charges, whether paid to third parties or incurred or charged internally.” 2015 MAGR § I.B.3
(emphasis added). Although AMC’s internal “legal/business affairs and accounting” are not to
be deducted, as such costs constitute “AMC’s Overhead,” there can be no question that the fees
paid to AMC’s outside counsel, accountant, and data security firm and other third parties that
Plaintiffs complain of are allowed under the binding MAGR Definition.
6. Music Publishing. Plaintiffs claim AMC breached the 2010 Agreement by charging a
50% distribution fee and 15% administration fee on music publishing receipts. FAC¶26(g).
AMC’s MAGR Definition plainly authorizes these fees. SUF¶74 (quoting 2015 MAGR
§ I.B.2(h)). Specifically, it allows a charge of “fifty percent (50%) of the Gross Receipts derived
from the exercise of Ancillary Rights, provided that AMC may also charge an administrative fee
of fifteen percent (15%) on the Gross Receipts derived from Music Publishing Rights.” Id.
(emphasis added). Ancillary Rights include “Music Publication Rights” and “Distribution and
Soundtrack Rights,” 2015 MAGR § I.B.1(iv), which refer to AMC’s right to “exploit” The
Walking Dead soundtrack and associated music. SUF¶75; 2015 MAGR §§ I.A(4), (10).
7. Merchandising Fee. Plaintiffs assert that AMC breached the 2010 Agreement’s MFN
because another MAGR participant’s MAGR definition lets AMC deduct only a 35%
distribution fee on merchandising receipts as opposed to the 50% in Darabont’s MAGR
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definition. FAC¶¶26(n), 29, 32(c)-(d). But Darabont’s MAGR MFN (§ 13(d)(iv)) only applies
if another MAGR definition is more favorable “taken as a whole, and not based on its individual
terms.” SUF¶76. Even if the “individual term[]” Plaintiffs identify is less favorable in
Darabont’s MAGR definition, it is undisputed that the other participant’s MAGR definition is
less favorable than Darabont’s “taken as a whole.” SUF¶¶78-81.
8. MAGR Advances. Plaintiffs claim that AMC breached the 2010 Agreement by
deducting advances paid to other MAGR participants. FAC¶¶26(k), (l). But the MAGR
Definition expressly allows for “advances of any kind against Participant’s or any other third
party participation” to be deducted from Gross Receipts. SUF¶¶82-85. To the extent Plaintiffs
assert that paying advances to other participants violates Darabont’s MAGR MFN, they are
wrong: the MFN applies only to the definitions of MAGR—i.e., the formula for how MAGR is
calculated—not to whether other MAGR participants are entitled to advances.17
9. Interest. Because each of Plaintiffs’ breach theories is flawed, their derivative claim
that AMC “inflated” “[t]he interest applied to AMC’s production costs” fails. FAC¶26(m).
* * *
This Court should rule that (i) AMC’s MAGR Definition governs, and (ii) each of
Plaintiffs’ theories of breach fail under the MAGR Definition’s plain terms. Plaintiffs’
position—that MAGR is governed by a patchwork comprising fragments of AMC’s MAGR
definition and amorphous industry customs—is untenable and commercially absurd. The
sophisticated parties who negotiated the 2010 Agreement did not leave MAGR to be defined in
17
Plaintiffs’ counsel directed Plaintiffs’ damages expert to
. That claim is nowhere in the FAC. And for good reason.
The MAGR Definition expressly permits deducting “Other Participants” from “Gross Receipts.” 2015 MAGR
§ I.B(4). In fact, the parties expressly recognized that payments to other MAGR participants would be included
as deductions in Section 13(d)(ii)(D) of the 2010 Agreement, which provides only that payments to other
participants would not be treated as “production costs,” not that such expenses could not be counted at all.
19
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such a nebulous manner. Instead, the parties agreed unequivocally that AMC’s MAGR
Definition would govern, subject to only the specific modifications Plaintiffs secured in the 2010
Agreement itself. See 2010 Agreement § 13(d)(ii). This Court should grant summary judgment
to Defendants.
II. This Court Should Grant Summary Judgment on Plaintiffs’ Contract Claim Based
on an Alleged Breach that Never Occurred.
Defendants are entitled to summary judgment on Plaintiffs’ remaining breach of contract
theory because Plaintiffs “lack [] evidence to support” it. Negron v. Franklin Plaza Apt.
Complex, 39 A.D.3d 281, 281 (1st Dep’t 2007). Plaintiffs claim AMC breached by double
counting promotional fees related to The Walking Dead at Comic-Con. FAC¶26(i). It is
undisputed, however, that AMC corrected that error. SUF¶¶87-89.18
III. This Court Should Grant Summary Judgment on Plaintiffs’ Claims Based on
AMC’s Alleged Audit Conduct, Because Plaintiffs Have Not Proven Any Resulting
Damages.
Plaintiffs assert claims for breach of contract and the implied covenant of good faith and
fair dealing arising from AMC’s alleged delays during the audit and alleged refusal to disclose to
the Plaintiffs’ auditors the agreements of other profit participants. FAC¶¶32(b), 36(a)-(b).
Whether these delays occurred (they did not) and whether Plaintiffs were entitled to the contracts
they sought (they were not) is of no moment, because Plaintiffs have failed to show any damages
resulting from AMC’s alleged conduct. “Where a party has failed to come forward with
evidence sufficient to demonstrate damages flowing from the breach alleged and relies, instead,
on wholly speculative theories of damages, dismissal of the breach of contract claim is in order.”
18
To the extent Plaintiffs seek to challenge Comic-Con-related expenses other than the banner identified in the
FAC, such contentions are beyond this case’s scope. In any event, the MAGR Definition expressly allows
deductions for promotions: “Distribution Charges” include “[a]ll costs associated with advertising, promoting,
publicizing or otherwise marketing” The Walking Dead. 2015 MAGR § I.B.3(f) (emphasis added); SUF¶86.
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Lexington 360 Assocs. v. First Union Nat’l Bank of N. Carolina, 234 A.D.2d 187, 190 (1st Dep’t
1996) (reversing summary judgment denial).
This Court should grant summary judgment because Plaintiffs have adduced no
evidence—or even a “speculative theor[y]”—that the alleged delays and refusal to share
agreements resulted in damage. FranPearl Equities Corp. v. 123 W. 23rd St., LLC, 164 A.D.3d
1190 (1st Dep’t 2018), appeal denied, 33 N.Y.3d 908 (2019) (affirming summary judgment
grant where “plaintiff failed to show that it was harmed by defendant’s delay” in performing);
Train v. Gen. Elec. Capital Corp., 8 A.D.3d 192-93 (1st Dep’t 2004) (same for implied covenant
claim). Despite Plaintiffs’ delay assertions, it is undisputed that Plaintiffs were able to exercise
their audit rights under AMC’s MAGR definition and that the audit they conducted in fact
completed. FAC¶24; SUF¶¶90-91. Indeed, Plaintiffs were able to bring this action based on
numerous alleged breaches purportedly discovered as a result of that audit. The alleged delays
clearly did not impede that effort and caused no harm whatsoever. Nor have Plaintiffs identified
any harm stemming from any alleged withholding of contracts.
Because Plaintiffs “failed to present any evidence of damages resulting from” these
claimed breaches, this Court should grant summary judgment to Defendants. Viacom Outdoor,
Inc. v. Wixon Jewelers, Inc., 82 A.D.3d 604, 604 (1st Dep’t 2011).
IV. This Court Should Grant Summary Judgment on Plaintiffs’ Implied Covenant
Claim as Duplicative of Their Breach of Contract Claim.
Courts regularly dismiss claims for breach of the implied covenant of good faith and fair
dealing as duplicative where a claim “arose from the same facts and sought identical damages”
as a breach of contract claim. Havell Capital Enhanced Mun. Income Fund, L.P. v. Citibank,
N.A., 84 A.D.3d 588, 588 (1st Dep’t 2011). This Court should too.
21
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Plaintiffs’ implied covenant claim is premised on the exact theory as their breach of
contract claim: AMC breached the 2010 Agreement by “[o]bstructing Plaintiffs’ audit rights by
unreasonable delaying the audit” and “refusing to disclose the agreements of other TWD profit
participants to the Auditors. FAC¶¶36(a)-(b); see FAC¶32(b) (near-identical allegation in breach
of contract claim). Nor do Plaintiffs identify any remedy they could achieve from prevailing on
their implied covenant claim that is distinct from any remedy were they to prevail on the breach
of contract claim. None exists. Because AMC’s alleged underlying conduct is “duplicative of
the breach-of-contract claim, as both claims arise from the same facts and seek the identical
damages for each alleged breach,” Amcan Holdings, Inc. v. Canadian Imperial Bank of
Commerce, 70 A.D.3d 423, 426 (1st Dep’t 2010) (citations omitted), this Court should grant
Defendants’ motion for summary judgment with respect to the implied covenant claim. Logan
Advisors, LLC v. Patriarch Partners, LLC, 63 A.D.3d 440, 443 (1st Dep’t 2009).
CONCLUSION
For the foregoing reasons, Defendants respectfully request that the Court grant their
motion for summary judgment and: (i) hold that the parties’ contract clearly and unambiguously
provides that AMC’s MAGR Definition governs the calculation of Plaintiffs’ MAGR, and
(ii) dismiss each of Plaintiffs’ claims in full and with prejudice.
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Dated: December 16, 2019

New York, New York
By: /s/ Orin Snyder

Orin Snyder
Brian Ascher
Lee R. Crain
200 Park Avenue
New York, New York 10166-0193
Telephone: 212.351.4000
Facsimile: 212.351.4035
Scott A. Edelman (pro hac vice)

2029 Century Park East, Suite 4000
Los Angeles, California 90067-3026
Telephone: 310.557.8061
Facsimile: 310.552.7041
Ilissa Samplin
333 South Grand Avenue
Los Angeles, California 90071-3197
Telephone: 213.229.7354
Facsimile: 213.229.6354
Attorneys for Defendants
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ATTORNEY CERTIFICATION PURSUANT TO COMMERCIAL DIVISION RULE 17
I, Orin Snyder, an attorney duly admitted to practice law before the courts of the State of
New York, hereby certify that this Memorandum of Law in Support of Defendants’ Motion For
Summary Judgment complies with the word count limit set forth in Rule 17 of the Commercial
Division of the Supreme Court (22 NYCRR 202.70(g)) because it contains 6,984 words,
excluding the parts of the memorandum exempted by Rule 17. In preparing this certification, I
have relied on the word count of the word-processing system used to prepare this memorandum
of law.
Dated: December 16, 2019

New York, New York
By: /s/ Orin Snyder

Orin Snyder
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FILED: NEW YORK COUNTY CLERK 12/16/2019 11:29 PM INDEX NO.

SUPREME COURT OF THE STATE OF NEW YORK

MEMORANDUM OF LAW IN SUPPORT OF

GIBSON, DUNN & CRUTCHER LLP

Attorneys for Defendants

PRELIMINARY STATEMENT .................................................................................................... 1

A. The Parties Contract to Provide Darabont a Percentage of MAGR. ................................. 4

B. Section 13 of the 2010 Agreement Governs Darabont’s MAGR Participation................. 5

D. AMC “Furnish[es]” Its MAGR Definition to Darabont, Who Initiates Litigation

I. This Court Should Grant Summary Judgment to Defendants on Plaintiffs’

A. AMC’s MAGR Definition Governs Plaintiffs’ MAGR Participation. ..................... 9

B. Numerous Contract Claims Conflict with AMC’s MAGR Definition.................... 13

Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce,

Ashwood Capital, Inv. v. OTG Mgt., Inc.,

Banco Espirito Santo, S.A. v. Concessionaria Do Rodoanel Oeste S.A.,

Darabont v. AMC Network Entm’t LLC,

Ehrlich v. Am. Moninger Greenhouse Mfg. Corp.,

Ellington v. EMI Music, Inc.,

FranPearl Equities Corp. v. 123 W. 23rd St., LLC,

Garrett v. Music Pub. Co. of Am., LLC,

Gas Nat., Inc. v. Iberdrola, S.A.,

Greenfield v. Philles Records,

Havell Capital Enhanced Mun. Income Fund, L.P. v. Citibank, N.A.,

L-7 Designs, Inc. v. Old Navy, LLC,

Lexington 360 Assocs. v. First Union Nat’l Bank of N. Carolina,

Logan Advisors, LLC v. Patriarch Partners, LLC,

In re Marshall v. Pittsford Cent. Sch. Dist.,

Melnitzky v. Sotheby Parke Bernet,

N.Y. State Elec. & Gas Corp. v. Aasen,

Nat’l Fuel Gas Distrib. Corp. v. Hartford Fire Ins. Co.,

Negron v. Franklin Plaza Apt. Complex,

Oppenheimer & Co., Inc. v. Oppenheim, Appel, Dixon & Co.,

Quadrant Structured Prods. Co., Ltd. v. Vertin,

Russin Beer, Inc. v. Phoenix Beverages, Inc.,

Stop & Shop Cos. v. Assessor of the City of New Rochelle,

Train v. Gen. Elec. Capital Corp.,

U.S. Bank v. ILDA, LLC,

U.S. Smokeless Tobacco Mfg. Co., LLC v. City of New York,

Utica Mutual Ins. Co. v. Clearwater Ins. Co.,

Viacom Outdoor, Inc. v. Wixon Jewelers, Inc.,

In re Viking Pump, Inc.,

Winsch v. Esposito Bldg. Specialty, Inc.,

Yonkers Ave. Dodge, Inc. v. BZ Results, LLC,

Zuckerman v. City of New York,

21 U.S.C. § 387 ..............................................................................................................................15

Black’s Law Dictionary .................................................................................................................15

Restatement (Second) of Contracts § 226 cmt.b ............................................................................11

judgment. C.P.L.R. 3212.

Plaintiffs attempted to re-negotiate their contracts through litigation to achieve a financial

the show’s “Modified Adjusted Gross Receipts” (“MAGR”)—commonly referred to as

entertainment company has its own distinct MAGR formula.

AMC’s MAGR definition (which shall be furnished to [Darabont]),” as “modified” by a number

despite the unambiguous language in the 2010 Agreement stating otherwise.

Agreement—“MAGR shall be defined, computed and paid by [AMC] in accordance with

practice.” But the 2010 Agreement’s heavily-negotiated, unambiguous terms foreclose

A. The Parties Contract to Provide Darabont a Percentage of MAGR.

pursuant to a Pay-or-Play clause in his contract.4 SUF¶¶2-3.

Participation” or a percentage of MAGR. Id.; 2010 Agreement § 13; Darabont, 2018 WL

6448457, at *1. Although talent agencies generally receive a percentage commission of a

package fees before completing negotiations for its client. Id.

B. Section 13 of the 2010 Agreement Governs Darabont’s MAGR Participation.

1. Third-Party Production Scenario: “If the Series is produced with a third-party

13(d)(i)’s third-party production provision, in Section 13(d)(ii)—the in-house MAGR

Amendment provides for increased episodic payments and conditional improvements to