In an August 12, 2011, decision by Justice Bransten, the court denied defendant-former officer’s motion to dismiss plaintiff-computer game developer’s action for breach of contract and breach of fiduciary duty.
Plaintiff developed an internet-based computer game and hired a consulting company to help develop the software for the game. Plaintiff sought to purchase the software company, but after plaintiff and defendant entered into a confidentiality agreement in which defendant agreed not to use plaintiff’s intellectual property for his own benefit or the benefit of third parties, the company was sold to a third party in which defendant had an alleged and undisclosed interest. Defendant resigned shortly thereafter. Plaintiff brought this action alleging that defendant had breached the confidentiality agreement, as well as his fiduciary duties to plaintiff, after learning that the software company was using its intellectual property to develop a similar game.
On defendant’s motion, the court rejected his argument that he was the rightful, registered owner of the game’s domain name because he allegedly re-registered and sought to auction off the domain name after executing the confidentiality agreement. The court also rejected defendant’s interpretation of the agreement as not strictly prohibiting conflicts of interest and otherwise found that plaintiff sufficiently pleaded the elements of a cause of action for breach of contract. As to defendants claims for breach of fiduciary duty, the court held that the heightened pleading requirement of CPLR 3016 “does not require a plaintiff to have perfect knowledge of the facts underlying its claim at the initial stage of a litigation” and that “New York law has recognized duties that outlive the fiduciary relationship” and therefore upheld plaintiff’s allegations in support of its claims despite having alleged misconduct on the part of defendant well after he had resigned.
First Games Publ. Network, Inc. v Afonin, Sup Ct, New York County, August 12, 2011, Bransten, J., Index No. 650092/2010