Jambetta Music Inc. v. Nugent

In 1997, Wayne Nugent (defendant), in his own right and on behalf of the members of the new band Us, entered into a recording and publishing contract with Jambetta Music, Inc. (Jambetta) (plaintiff) to compose, record, and deliver enough commercially viable songs for a full-length album. The contract was subject to renewal in Jambetta’s discretion. In exchange, Jambetta agreed to produce, promote, and market Us’s album and to advance up to $250,000 to cover Us’s costs. Under the contract, Jambetta received full rights to all recordings, the exclusive right to administer all copyrights, and an undivided 50 percent interest in all controlled compositions, defined as all compositions written, composed, owned, or controlled, in whole or in part, by Nugent or any other member of Us during the contract term. The contract contained a restrictive covenant expressly barring Us members from recording or composing music for third parties. Regardless, starting in 1999, Nugent began working with other artists and companies to record, compose, and produce new music. In 2004, Nugent signed an exclusive contract with Sony/ATV, pursuant to which Nugent assigned his rights in several controlled compositions to Sony. Jambetta sued for breach of contract. The court granted Jambetta summary judgment and held a trial to calculate damages. Jambetta sought damages based on lost profits, actual investments, and unpaid royalties for music Nugent had composed or recorded with other artists or companies during the contract term. Jambetta also sought an injunction barring Nugent from working for third parties until the contract terms were satisfied. Nugent countered, arguing that lost-profit damages were not contemplated in the agreement and that Jambetta should be precluded from seeking damages based on royalties Nugent earned after the breach. [Editor’s Note: The New York Supreme Court is New York’s trial-level court.]