12552. BABY PHAT HOLDING COMPANY, LLC, plf-res, v. KELLWOOD COMPANY, def-ap — Katten Muchin Rosenman LLP, New York (Jessica M. Garrett of counsel), for ap — Gordon, Herlands, Randolph & Cox, LLP, New York (Peter J. Vranum of counsel), for res — Order, Supreme Court, New York County (Charles E. Ramos, J.), entered January 3, 2014, which, to the extent appealed from as limited by the briefs, denied defendant’s motion to dismiss and to compel arbitration, unanimously modified, on the law, to dismiss the claim for negligent misrepresentation, and otherwise affirmed, without costs.
The complaint alleges that plaintiff entered into an agreement with defendant’s wholly owned subsidiary, nonparty Phat Fashions, LLC (PFLLC), to purchase certain trademarks, copyrights and contractual rights. One of the key assets sold by PFLLC was a license under which a company called Intimateco paid royalties directly to defendant as compensation for its use of a PFLLC trademark. Although PFLLC is denominated as the seller under the agreement, plaintiff alleges that all of its negotiations were exclusively with defendant and it paid the $5.35 million purchase price directly to defendant. Prior to signing the agreement, defendant provided plaintiff with a royalty schedule showing that PFLLC’s license with Intimateco would yield a minimum guaranteed income stream of $1.5 million over the next three years.However, plaintiff further alleges that defendant knew that the guaranteed income from the Intimateco license was only $75,000 for that period of time. The agreement expressly requires PFLLC to cease doing business following the contract closing and provides that PFLLC shall “wind-up, liquidate, dissolve or otherwise cease its legal existence” within 30 days of the six month period following the closing.
