Opinion
Civil Action No. 2:18-CV-13531-JMV-SCM
01-07-2020
MICHAEL CRAM, an individual doing business as PACIFIC PRODUCTIONS, Plaintiff, v. THE FANATIC GROUP LLC, Defendant.
NOT FOR PUBLICATION
ON MOTION TO ENFORCE SETTLEMENT
[D.E. 30]
REPORT AND RECOMMENDATION STEVEN C. MANNION, United States Magistrate Judge.
Before the Court is Defendant, The Fanatic Group LLC's Motion to Enforce Settlement. The Honorable John Michael Vazquez, U.S.D.J., has referred the motion to the undersigned for report and recommendation. After pro se Plaintiff, Michael Cram, missed the deadline to file an opposition to this motion, this Court sua sponte extended the opposition deadline another 7 days to August 14, 2019. To date, Plaintiff has not filed an opposition to this Motion. Oral argument was held on January 7, 2020. For the following reasons, the Court respectfully recommends that the motion to enforce settlement be GRANTED.
(D.E. 33, Order).
I. BACKGROUND AND PROCEDURAL HISTORY
This is a case about trademark infringement. Plaintiff, Michael Cram ("Mr. Cram"), became aware of Defendant's, The Fanatic Group, LLC ("Fanatic"), "Musical Pen" and "Talking Bottle Opener" in March 2016. Mr. Cram sent a letter to Fanatic asserting trademark infringement on July 21, 2016. The parties nearly settled the dispute for a lump sum of $6,000 without future royalties. Mr. Cram terminated his counsel, however, before memorializing the agreement. Fanatic continued to sell the musical pen and talking bottle openers for two years without hearing from Mr. Cram.
(Electronic Case Filing Docket Entry ("D.E.") 1, Compl. ¶ 1. Unless indicated otherwise, the Court will refer to documents by their docket entry number and the page number assigned by the Electronic Case Filing System.
Id.
(D.E. 1, Compl. ¶ 28).
(D.E. 30, Spiro Decl. at ¶ 5).
Id. at ¶ 7.
Id. at ¶ 8.
Id. at ¶ 9.
On September 9, 2018, Mr. Cram initiated this action with new counsel. Fanatic filed a motion to dismiss on November 10, 2018. On April 10, 2019, Fanatic notified the Court that the parties had reached a settlement in principle the day before. On April 12, 2019, the parties participated in a telephone settlement conference before the undersigned. The Court administratively terminated the action on April 18, 2019 for 60 days pending the final settlement agreement.
Id.
(D.E. 8, Def. Mot. To Dismiss).
(D.E. 20, Letter).
(D.E. 22, Order).
On April 17, 2019, Fanatic sent Mr. Cram a draft of the settlement memorializing the material terms agreed to on April 9, 2019. Mr. Cram's counsel returned a redline of the agreement to Fanatic on April 24, 2019 with an added "audit and records" provision. On April 30, 2019, Fanatic "largely" accepted the redline edits, including "a few minor redlines to [Mr. Cram's] edits" and resent the agreement to Mr. Cram's counsel.
(D.E. 30, Spiro Decl. at ¶ 14).
Id. at 15.
Id. at 16.
On May 7, 2019, Mr. Cram emailed Fanatic requesting that Fanatic agree to (1) take out assignment language and (2) provide Mr. Cram with "redacted royalty statements provided between Fanatic and IMG (formerly CLC and Collegiate Licensing Company) and Learfield Sports (formerly LRG), so that we have something to check the statements from Fanatic to Cram against to confirm the numbers." Fanatic responded, accepting the first but rejecting the second term, then resent the agreement on May 23, 2019.
Id. at 18.
Id. at 19.
Id.
On June 5, 2019, Bradley Rothschild, Mr. Cram's former counsel, filed a letter with the Court stating that the parties were unable to consummate settlement and that Mr. Cram wished to re-open the case. Mr. Rothschild also notified the Court that Mr. Cram would be pursuing the action pro se. Fanatic attempted to continue settlement negotiations with Mr. Rothschild, however, he informed Fanatic that Mr. Cram was pursuing the case pro se.
(D.E. 23, Letter).
Id.
(D.E. 30, Spiro Decl. at ¶ 21).
II. LEGAL STANDARD
A federal court may apply the substantive law of the forum state in deciding questions pertaining to the construction and enforcement of contracts. Under New Jersey law, a settlement agreement between parties to a lawsuit is itself a contract that is separate and independent from the underlying dispute. New Jersey public policy favors settlements. Courts will therefore "strain to give effect to the terms of a settlement wherever possible."
Excelsior Insurance Co. v. Pennsbury Pain Center, 975 F. Supp. 342, 349 (D.N.J. 1996); Life Ins. Co. v. Hayes-Green, No. 07-cv-2492 (WJM), 2008 WL 2119976, at *1 (D.N.J. May 20, 2008).
Trainer v. Anderson, Civil Action No. 2:12-CV-2409-SDW-SCM, 2017 WL 5622504 (D.N.J. Nov. 1, 2017).
"Traditional contract law rules provide that a contract arises from the manifest intentions of the parties to engage in an offer and acceptance of sufficiently definite essential terms." The burden is on the moving party to establish that the parties entered into a contract of settlement.
Longo v. First Nat. Mortg. Sources, 523 F. App'x. 875, 878 (3d Cir. 2013) (internal citations omitted).
LNT Merch. Co., 2009 WL 2169236, at *1 (D.N.J. July 21, 2009) (internal citations omitted).
In order to have an enforceable settlement or contract there "must be a meeting of the minds for each material term to an agreement." "A meeting of the minds occurs when there has been a common understanding and mutual assent of all the terms of a contract." Objective manifestations of intent are controlling when determining if there was a meeting of the minds.
Barton v. Mid-Atl. Flooring Ventures Inc., No. 13-4592, 2016 WL 4119803, at *4 (D.N.J. Aug. 1, 2016) (internal quotations and citations omitted).
Id. (citing Knight v. New England Mut. Life Ins. Co., 220 N.J. Super. 560, 565 (App. Div. 1987)).
See Brawer v. Brawer, 329 N.J. Super. 273, 283 (App. Div. 2000) ("A contracting party is bound by the apparent intention he or she outwardly manifests to the other party. It is immaterial that he or she has a different, secret intention from that outwardly manifested."); Leitner v. Braen, 51 N.J. Super. 31, 38 (App. Div. 1958) ("The phrase, 'meeting of the minds,' can properly mean only the agreement reached by the parties as expressed, i.e., their manifested intention, not one secret or undisclosed, which may be wholly at variance with the former.").
"Where a contract of settlement is actually held to exist...the party seeking to vacate the settlement must show compelling circumstances." "In general, settlement agreements will be honored absent a demonstration of fraud or other compelling circumstances.... Before vacating a settlement agreement, our courts require clear and convincing proof that the agreement should be vacated."
Bowles v. New York Liberty, 11-3529 (ES), 2014 WL 7148916, at *2 (D.N.J. Dec. 15, 2014) (quoting Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 475, 703 A.2d 9 (App. Div. 1996)).
Nolan by Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (internal quotations omitted).
II. DISCUSSION AND ANALYSIS
Fanatic has satisfied its burden of establishing that an enforceable settlement contract exists. Concomitantly, Mr. Cram has failed to show that "compelling circumstances" warrant vacating the parties' agreement.
This Court finds that the parties had a "meeting of the minds" as to each material term to the settlement agreement as of April 9, 2019. The undisputed record indicates that on April 9, 2019, Fanatic offered the following terms:
a. Fanatic shall pay to Plaintiff a lump sum royalty of $744.60 for Fanatic's sales of allegedly infringing products based on a fifteen-cent per unity royalty to Plaintiff for one year of Fanatic's sales of the musical bottle opener's products.
b. Fanatic shall enter into a non-exclusive license with Plaintiff to use Plaintiff's intellectual property associated with its musical bottle opener products in connection with the sale of its musical bottle opener product, and to sell Fanatic's pen products under Plaintiff's patent for the term of that patent.
c. Fanatic shall pay a fifteen-cent royalty per unit to Plaintiff on its annual sales of its musical bottle opener and musical pen products. If Fanatic's total annual sales of these products does not reach 10,000 units combined for both products, Fanatic will increase its royalty paid to Pacific to twenty-cent per unit for that year.
d. In exchange, Plaintiff will take all steps necessary to secure the dismissal of the Action.
(D.E. 30, Declaration of Jason Spiro).
That day, Mr. Cram accepted those material terms by stating "we have an agreement in principle". While the words "in principle" may indicate an intent to flesh out the particulars of the agreement, New Jersey courts have consistently held that "[w]here the parties agree upon the essential terms of a settlement, so that the mechanics can be 'fleshed out' in a writing to be thereafter executed, the settlement will be enforced notwithstanding the fact the writing does not materialize because a party later reneges." Thus, the parties reached a valid settlement agreement when they agreed to the essential terms.
Id.
Lahue v. Pio Costa, 623 A.2d 775, 788, 263 N.J. Super. 575, 596 (N.J. Super. A.D., 1993) (quoting Bistricer, 231 N.J. Super. at 145, 555 A.2d 45.).
Unsurprisingly, the next issue is whether the auditing procedure that the parties have disagreed upon is an "essential term" to the settlement. This Court finds it is not. This case is similar to Bistricer v. Bistricer, where the Superior Court of New Jersey found that the particular accounting procedure to a settlement agreement only "pertain[ed] to the fair implementation of the settlement. [It was] not [an] essential[] of the settlement." Here, similarly, the provision regarding auditing and record keeping functions as a means to facilitate the implementation of the essential terms, but is not itself essential. Accordingly, the absence of such language does not invalidate the settlement agreement.
Bistricer v. Bistricer, 555 A.2d 45, 48, 231 N.J. Super. 143, 149 (N.J. Super. Ch.,1987); see Hosfeld v. Postal Transport, Inc., 2017 WL 5175594, at 1 (D.N.J., 2017).
Mr. Cram has not provided, and this Court does not find any compelling circumstances to vacate the valid settlement contract.
III. CONCLUSION
For the reasons articulated above, the undersigned respectfully recommends that the motion to enforce settlement be GRANTED. The parties have fourteen days to file and serve any objections to this Report and Recommendation. The District Court need not consider frivolous, conclusive, or general objections.
28 U.S.C. § 636; L. Civ. R. 72.1(c)(2).
See Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
The Clerk of the Court is ordered to provide a copy of this report and recommendation to pro se plaintiff Michael Cram.
/s/
Honorable Steve Mannion, U.S.M.J.
United States District Court,
for the District of New Jersey
phone: 973-645-3827
1/7/2020 6:02:50 PM Original: Clerk of the Court
Hon. John Michael Vazquez, U.S.D.J.
cc: All parties
File Mr. Michael Cram
44489 Town Center #489
Palm Desert, CA 92260
The District of New Jersey has implemented an electronic case filing system for all documents filed with the Clerk of the Court. Pro se parties may register to receive notifications via email. Mr. Cram is requested to complete the attached form and file it with our Clerk's Office to receive electronic notifications.
Pro se (Non Prisoner)
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