ABKCO Industries v. Apple Films, Inc.

Apple Films, Ltd. (LTD) was an English company that owned certain rights to a film (film). LTD entered into a licensing agreement with New York-based Apple Films, Inc. (INC) (defendant) pursuant to which INC would pay LTD 80 percent of the net profits from the distribution of the film. In turn, INC entered into a distribution agreement with United Artists (United) pursuant to which INC transferred its rights regarding the film’s distribution to United in exchange for 50 percent of the film’s gross receipts. LTD borrowed money from ABKCO Industries, Inc. (ABKCO) (plaintiff). When LTD did not repay the loan, ABKCO—which could not obtain jurisdiction in New York over LTD—asked the supreme court to attach LTD’s interest in its licensing agreement with INC. The supreme court granted the requested attachment order, which ABKCO sought to use to establish quasi-in-rem jurisdiction over LTD. The appellate division affirmed. LTD appealed, arguing that the attachment was improper under Civil Practice Law and Rules (CPLR) § 5201(a) because LTD’s interest in the distribution agreement was not a debt that was past due or that was certain or payable upon LTD’s demand. Specifically, LTD cited the facts that (1) INC did not yet owe LTD money under the distribution agreement; (2) it was uncertain how successful the film would be and thus it was uncertain how much, if anything, INC would owe LTD under the distribution agreement; and (3) at the time of attachment LTD actually owed money to INC due to INC’s advancement of certain LTD expenses. LTD further argued that although its interest in the distribution agreement was assignable or transferable, its interest was not located in New York and thus was not attachable in New York.