Braunstein v. Jason Tarantella, Inc.

Citations: 87 A.D.2d 203; 450 N.Y.S.2d 862; 1982 N.Y. App. Div. LEXIS 16132

Court: Appellate Division of the Supreme Court of the State of New York; June 7, 1982; New York; State Appellate Court

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The case centers on the film "Fulfilling Young Cups," involving plaintiffs David Z. Braunstein and Shirley Braunstein, who loaned $45,829.48 to defendants Jason Tarantella, Inc. and Jay Braunstein for film production. Tarantella and Braunstein subsequently contracted with Troma, Inc., Michael Herz, and Lloyd Kaufman for distribution. The producers were arrested in Nassau County on obscenity charges related to the film's screening, leading to guilty pleas: Braunstein for attempted obscenity (misdemeanor) and Tarantella for obscenity (felony), establishing the film's obscene nature. The Braunsteins sued Tarantella, Braunstein, Troma, Herz, and Kaufman, claiming breach of debt against the producers and negligence against the distributors, which allegedly caused them damages. A lower court dismissed the negligence claim against Troma, Herz, and Kaufman, stating no legal duty was owed to the Braunsteins. In response, Tarantella and Braunstein denied debt liability and filed cross claims against Troma and the other defendants. The first cross claim seeks an accounting based on the distribution agreement, while the second claims negligence in distribution, linking it to their criminal prosecution. The appeal addresses the denial of Troma's motion to dismiss these cross claims for failure to state a cause of action.

The third cross-claim, labeled as a "second cross-claim," asserts that Tarantella and Braunstein have a fraud and deceit cause of action against Troma, Herz, and Kaufman due to misrepresentations regarding potential "high profits" from a film and the legality of its showing. It also claims that these parties defrauded Tarantella and Braunstein of funds to satisfy their own desires. Special Term denied a motion to dismiss the cross-claims, stating that the third cross-claim articulates a viable cause of action for negligent film distribution that violated local laws, leading to arrests of Braunstein and his parents, the plaintiffs. 

The court clarified that a previous ruling by Justice Young, which dismissed a second cause of action in the plaintiffs’ complaint, does not apply to the cross-claims as no contract existed between the plaintiffs and distributors, and thus no duty was found. The cross-claim indicates a duty arising from a contractual relationship, alleging breach and damages due to negligence. The court emphasized that on a motion to dismiss, it only assesses whether the allegations present an actionable cause.

The third cross-claim also meets the criteria for misrepresentation, and the first cross-claim for accounting sufficiently alleges a breach of the distribution agreement regarding financial reporting and distributions. Importantly, the court noted that while the cross-claims contain essential elements for causes of action, they should be dismissed due to public policy concerns. The producers, having pled guilty to crimes related to the film, admitted its obscenity under state law. Thus, allowing the producers to seek compensation from distributors for an obscene film would contradict New York’s penal statutes, effectively making the court a facilitator of illegal profits.

Court involvement is denied in disputes between producers and distributors of obscene films, as the law does not support claims arising from illegal activities. Allowing recovery would encourage further production of obscene films in violation of New York’s penal laws. Public policy prohibits courts from aiding parties seeking to profit from corruption, as established in McConnell v. Commonwealth Pictures Corp. The producers cannot maintain a contractual action for distribution since the film was produced unlawfully. The potential profit for distributors from not sharing proceeds is irrelevant; the focus is on denying recovery to producers for public interest reasons. 

To prevail in a negligence claim against the distributors, producers must demonstrate a legal duty based on their contractual relationship, which is fundamentally flawed since it arises from the producers' own illegal actions. The law prohibits enforcement of contracts founded on illegal activities, preventing producers from seeking legal recourse for damages related to their criminal conduct. Their expectation of profits from the obscene film does not justify a claim for negligence against the distributors, especially since the producers’ actions led to their own prosecution. Ultimately, the producers cannot seek damages due to the distributors’ failure to facilitate their illegal aims, as they themselves committed obscenity crimes and received appropriate legal consequences.

Recovery for damages related to the producers' convictions for negligent distribution of the film is denied, as it would effectively allow the producers to recoup their fines from their conviction for violating State law. Both the negligence and fraud cross claims made by the producers, Jason Tarantella, Inc. and Jay Braunstein, are dismissed. The dismissal of the fraud claim is based on public policy and the absence of allegations that the film's production was solely due to reliance on a misrepresentation by the distributors. The court emphasizes that producing obscene films in New York carries inherent risks. Consequently, the appellate court reverses the prior order from the Supreme Court of Nassau County, granting the motion to dismiss the cross claims without costs or disbursements.