Opinion
99 Civ. 10507 (TPG)
August 29, 2003
OPINION
Plaintiff Yurman Design, Inc. sues Garden Jewelry Manufacturing Corp. asserting various claims arising out of copyright, trademark, and contract. This is the second action in the contentious and litigious history between the parties. The first action, Yurman Design, Inc. v. Garden Jewelry Manufacturing Corp. (95 Civ. 8107) (DAB), was settled pursuant to an agreement dated October 25, 1996 and discontinued with prejudice. That 1996 Settlement Agreement is at the heart of the parties' present dispute.
Yurman Design, Inc. is a company whose principal is David Yurman. Hereafter, when the name "Yurman" is used, this refers to the company. "David Yurman" will refer to the principal.
Yurman's amended complaint alleges thirteen causes of action based on federal and state law: (1) copyright infringement in violation of 17 U.S.C. § 106; (2) trademark infringement in violation of § 32(1) of the Lanham Act, 15 U.S.C. § 1114(1)(a); (3) trade dress infringement in violation of § 43(A) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A); (4) fraudulent inducement of the 1996 Settlement Agreement; (5) breach of the 1996 Settlement Agreement; (6) anticipatory breach of the 1996 Settlement Agreement; (7) unfair competition under New York law; (8) misappropriation; (9) unjust enrichment; (10) reformation or rescission based on unilateral mistake by Yurman and fraud on the part of Garden; (11) reformation or rescission of the agreement based on mutual mistake; (12) declaration that the agreement is unenforceable based on lack of mutual assent to material terms; and (13) declaration that the agreement is unenforceable based on lack of finality.
Yurman seeks declaratory and injunctive relief as well as damages.
Garden has moved to dismiss Counts four, six, ten, eleven, twelve, and thirteen of Yurman's Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Since various materials outside of the amended complaint have been referred to by the parties and relied upon by the court, the motion will be treated as one for summary judgment.
Garden's motion is granted in part and denied in part.
Facts
Yurman and Garden are competitors in the jewelry industry. In the 1995 action Yurman alleged that Garden was infringing on Yurman's trade dress, namely its motif of an "X" on cable. On January 31, 1996 there was a settlement discussion concerning the 1995 action. In addition to the attorneys, the principals of the parties were present — David Yurman for plaintiff and Miklos Gottlieb for Garden. The next day the principals met without counsel. Gottlieb brought some of the jewelry manufactured by Garden to the meeting. Exactly what jewelry was at this meeting has been a subject of considerable contention. No listing or other record was made by either side. Yurman and Gottlieb were unable to reach a settlement during the meeting. There were no further settlement discussions between the principals.
On October 1, 1996 the attorneys for the parties met in a settlement conference before Magistrate Judge Peck. They then exchanged settlement offers on October 3, 14, 17 and 26. None of the settlement offers exchanged during this period made any reference to the items shown at the February 1, 1996 meeting. On October 26, 1996 the parties entered into a Settlement Agreement, and the first action was dismissed with prejudice.
The following is the relevant language of the 1996 Settlement Agreement. It should be noted that the 1995 action was against both Garden and a related company, Service Merchandise.
2. Yurman shall not assert any claims against Garden, Service Merchandise or any of Garden's or Service Merchandise's customers, arising from Garden's and/or Service Merchandise's sale, offer for sale, or advertising of any of Garden's "X", "CABLE" or "X CABLE" jewelry designs. [Notwithstanding the foregoing, and subject to the terms of Paragraph 3 below, this paragraph shall not apply to text used in advertising.]
3. [Yurman hereby consents not to sue Garden, Service Merchandise or their customers for any use of the terms CABLE, CABLE COLLECTION, THE CABLE COLLECTION or "X" COLLECTION to describe any of its collection of cable jewelry.]
4. Garden and Service Merchandise consent not to attack Yurman's trademark or Yurman's U.S. Trademark Registration No. 1,658,160 for the mark THE CABLE COLLECTION in any respect
The terms of the agreement are broad. Yurman agrees not to assert "any claims" against Garden "arising from Garden's sale of any of Garden's "X" or Cable jewelry designs or its "X Cable" jewelry design. The agreement is not limited to trade dress claims, but covers claims generally. As to the use of trade names, Yurman agrees not to sue Garden about the use of CABLE, CABLE COLLECTION, THE CABLE COLLECTION or "X" COLLECTION to describe Garden's jewelry collections. Again, the language is broad and there is no limitation on what is in effect a general permission to use these names for descriptive purposes.
A dispute arose between the parties based in large part upon Yurman's belief that the language of the Settlement Agreement did not reflect what Yurman had intended or agreed to.
The present action was brought in 1999. A principal feature of Yurman's case was the claim that the 1996 Settlement Agreement was void for vagueness. After extensive hearings, including the taking of testimony, the court dismissed this claim on August 1, 2001.
An amended complaint was filed on August 3, 2001. The amended complaint asserts claims of improper copying against Garden under federal and state law. The amended complaint also renews the attack on the 1996 Settlement Agreement, asserting additional theories as to why it should not be enforced. In the alternative, there are claims for reformation. As to the final alternative, the amended complaint asserts that Garden has violated the Settlement Agreement as properly interpreted.
Discussion
1. Fraudulent InducementIn Count Four Yurman alleges that Garden fraudulently induced it to enter into the 1996 Settlement Agreement. Yurman claims that at the February 1, 1996 meeting between the principals, Gottlieb presented a number of items of jewelry to David Yurman, indicating that these items represented the limit of what Garden intended to market in the way of cable or "X" on cable jewelry. It is alleged that all of this involved fraud on the part of Garden, and that Garden did not intend to restrict itself to those items. Yurman alleges, however, that he entered into the Settlement Agreement in reliance on the idea that Garden's rights under the agreement were limited to what was displayed at the February 1, 1996 meeting.
However, no settlement was agreed upon at the meeting, and there is no evidence supporting the theory that the settlement ultimately arrived at was based in any way upon what Gottlieb brought to the meeting. Neither side bothered to make a list or record of the jewelry presented a the meeting. Settlement negotiations did not occur until many months later in October. After the October 1996 meeting presided over by Magistrate Judge Peck the parties exchanged written settlement offers. None of these offers made any reference to the items shown at the meeting. The Settlement Agreement itself contained no reference to specific items of jewelry or any limitation based on such items.
Yurman's theory in Count Four is wholly negated by the undisputed facts of what occurred in the settlement negotiations. Yurman was, of course, represented by counsel, and if Yurman had truly wished to have Garden's rights under the agreement limited to the items displayed in February, Yurman should have requested that this limitation be specified in the agreement, which was not done. As far as attributing a fraudulent intent to Garden, to the extent that Garden intended to market jewelry on a broader basis than what may have been suggested at the February meeting, this was entirely consistent with the broad language of the Settlement Agreement.
Garden is entitled to summary judgment dismissing Count Four. There is no triable issue of fact.
2. Anticipatory Breach
In Count Six Yurman claims that certain communications by Garden following the Settlement Agreement constituted an anticipatory breach of that agreement. There is nothing to this claim. Garden was simply asserting its position based upon its interpretation of the Settlement Agreement. Obviously, this position was disputed by Yurman. But Garden's conduct does not fall under the heading of anticipatory breach of contract. Count Six is dismissed.
3. Unilateral Mistake
Count Ten of the amended complaint alleges that Yurman entered into the Settlement Agreement because of a unilateral mistake caused by Garden's fraud.
A unilateral mistake occurs "where the defect in the written agreement is the product of the unilateral mistake of one party and the fraud of the other." De la Gueronniere v. Simon, 1998 WL 226199 at *3 (S.D.N.Y. 1998).
Count Ten is in substance the same as Count Four. What has already been said about Count Four applies with equal force to Count Ten. Summary judgment is granted and Count Ten is dismissed.
4. Mutual Mistake
Yurman alleges in Count Eleven that it entered into the Settlement Agreement because of a mutual mistake between it and Garden.
"A mutual mistake occurs when both parties to a bilateral transaction share the same erroneous belief and their acts do not in fact accomplish their mutual intent." Warner Theatre Associates LP v. Metropolitan Life Ins. Co., 1997 WL 685334 at *7 (S.D.N.Y. 1997). A claim for rescission of a contract based on mutual mistake must be dismissed if the parties do not share a substantially similar erroneous belief as to the facts. Id.
Yurman is not claiming that there was the same mistaken belief shared by Yurman and Garden. Yurman's alleged mistake is that it believed that the scope of the Settlement Agreement would be limited to those items of jewelry presented at the February 1, 1996 meeting. Garden had a very different belief — i.e., that the Settlement Agreement conferred broader rights.
For these reasons Count Eleven must be dismissed.
5. Lack of Mutual Assent
Yurman alleges in Count Twelve that the Settlement Agreement is unenforceable due to lack of mutual assent between it and Garden as to material terms. In the proceedings held thus far in this action, the possibility has emerged that both sides understood that there were limitations on the very broad language in the Settlement Agreement. However, there are indications that the parties had substantially different ideas as to what these limitations were.
The court denies the application to dismiss Count Twelve.
6. Lack of Finality
Yurman alleges in Count Thirteen that the Settlement Agreement is unenforceable due to "lack of finality," since Yurman and Garden did not agree on the language of a statement to be provided to members of the jewelry trade after the 1995 Action had been settled and discontinued with prejudice.
Paragraph 7 of the Agreement states that Yurman and Garden were to prepare an agreed upon statement to provide to third parties concerning Garden's rights vis-a-vis cable products and the term THE CABLE COLLECTION.
Immediately after the Settlement Agreement was signed and the 1995 Action dismissed, Garden showed its proposed statement to Yurman. The statement paraphrased the Settlement Agreement. Yurman remained silent and Garden relied upon Yurman's silence as approval. Garden then used the statement and continued with its business of developing and marketing jewelry. Yurman has delayed raising an issue about this matter for almost 7 years. Yurman is certainly guilty of laches. In any event, the matter is surely not substantial enough to cause the Settlement Agreement to be unenforceable.
Conclusion
For the foregoing reasons, Garden is entitled to summary judgment dismissing Counts Four, Six, Ten, Eleven and Thirteen of the amended complaint. Garden's motion is denied as to Count Twelve.
SO ORDERED.