Summary
denying motion to dismiss based on laches; court could not say that defendants could not prove any set of facts to avoid laches defense
Summary of this case from Salim v. Nisselson (In re Big Apple Volkswagen, LLC)Opinion
No. 05 Civ. 6757 (LTS) (MHD).
December 19, 2006
MEMORANDUM OPINION AND ORDER
Before the Court is a motion to dismiss Counts I, II, III, IV and V of Defendants' counterclaims (i.e., Defendants' trademark infringement-related counter-claims) based on the defenses of res judicata and laches. For the following, reasons Plaintiffs' motion to dismiss is denied in its entirety.
In evaluating a motion to dismiss a pleading pursuant to Rule 12(b)(6), the Court must take as true the facts alleged in the claimant's pleading and draw all reasonable inferences in his favor. W. Mohegan Tribe Nation v. Orange County, 395 F.3d 18, 20 (2d Cir. 2004); Hernandez v. Coughlin, 18 F.3d 133, 136 (2d Cir. 1994). The Court must not dismiss a complaint or counterclaim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). On a motion to dismiss, the court may consider "any written instrument attached to the [pleading] as an exhibit or incorporated in the complaint by reference, as well as documents upon which the complaint relies and which are integral to the complaint." Subaru Distribs. Corp. v. Subaru of Am., Inc., 425 F.3d 119, 122 (2d Cir. 2005). This includes documents "that the [claimant] either possessed or knew about and upon which [it] relied in bringing the suit."Rothman v. Gregor, 220 F.3d 81 , 88-89 (2d Cir. 2000). The Court may also take judicial notice of "public documents on a motion to dismiss to determine whether claims are barred by prior litigation." Cowan v. Codelia, No. 98 civ. 5548, 2001 WL 856606 (S.D.N.Y. July 30, 2001). Here, Defendants, in their answer, reference a May 2003 settlement agreement, entered into in connection with litigation between the parties in the United States District for the Southern District of Florida, and incorporate it into their counterclaims. The Court finds that this document is integral to Defendants' answer and so the Court will consider it in making its decision. The Court will also take judicial notice of Defendants' September 2001 Complaint and the May 2003 Dismissal with prejudice as public documents filed in Florida litigation.
The affirmative defense of res judicata may be the basis of a motion to dismiss a pleading when it is clear from the records properly before the Court that the doctrine applies. See Day v. Moscow, 955 F.2d 807, 811 (2d Cir. 1992). "[U]nder the doctrine of res judicata, a judgment on the merits in a prior suit involving the same parties bars a second suit based on the same cause of action." Stonewall Ins. Co. v. Nat'l Gypsum Co., No. 86 Civ. 9671, 1992 WL 51567, at *4 (S.D.N.Y. March 9, 1992). Furthermore, "[a] dismissal with prejudice arising out an agreement of the parties is an adjudication of all matters contemplated in the agreement, and a court order which memorializes this agreement bars further proceedings." Id. at *5. There is no mechanical formula to use in determining whether the claims are duplicative; "the determination hinges upon the factual predicate of the several claims asserted." Berlitz Schools of Languages of America, Inc. v. Everest House, 619 F.2d 211, 215 (2d Cir. 1980). Preclusive effect is given to all matters decided in the prior litigation as well as any matters that could have been raised but were not in fact raised. Stonewall Ins. Co., 1992 WL 51567, at *5. However, "[i]f the second litigation involves different transactions, and especially subsequent transactions, there is generally no claim preclusion." Rosenthal A.G. v. Gary Rosenthal, No. 96 Civ. 8093, 1998 U.S. Dist. LEXIS 13674, at *12 (S.D.N.Y. Sept. 3, 1998) (citing S.E.C. v. First Jersey Secs., Inc., 101 F.3d 1450, 1463-64 (2d Cir. 1996)).
The Court denies Plaintiffs' motion to dismiss the counterclaims on the grounds of res judicata because, in light of the fact that both parties in their briefing treat the counterclaims as embracing the range of the "Lucky Family of Marks" that is the subject of Plaintiffs' claims, and drawing all reasonable inferences in Defendants' favor, the Court cannot say at this stage that all of the relevant aspects of the disputed counterclaims were raised or could have been raised prior to the 2003 dismissal and settlement of the Florida litigation. The Complaint in this case lists a number of Plaintiffs' marks that were registered or filed after the May 2003 settlement agreement and dismissal. The instant record does not indicate whether these marks were in use or otherwise known to Defendants prior to the 2003 dismissal and settlement agreement. Thus, it cannot be said definitively at this stage that all of Defendants' allegations of infringement in their counterclaims in connection with Plaintiffs' marks, which include marks registered or filed after 2003, could have been raised in the prior litigation and are thus barred by the doctrine of res judicata. Plaintiffs are free to raise the issue of res judicata again after the record is more fully developed, including further development of the nature and use of the post-2003 marks.
"[W]hen the defense of laches is clear on the face of the complaint, and where it is clear that the plaintiff can prove no set of facts to avoid the insuperable bar, a court may consider the defense on a motion to dismiss." Solow Bldg. Co. v. Nine West Group. Inc., No. 00 Civ. 7685, 2001 WL 736794, at *3 (S.D.N.Y. June 29, 2001) (quotation marks and citation omitted). "To prevail on a defense of laches, defendants must establish [that] . . . (1) plaintiff had knowledge of defendants' use of its marks; (2) plaintiff inexcusably delayed taking action; and (3) defendants will be prejudiced by permitting plaintiff to asserts its rights now." Id.
Here, the Court denies Plaintiffs' motion to dismiss based on laches because it cannot say on the instant record that Defendants cannot prove any set of facts to avoid this defense. As the Court noted above, Defendants' allegations of infringement appear to be based in part on marks that were registered or filed after the 2003 settlement agreement, including marks filed or registered as late as March 2005. Again, the record does not indicate whether these marks were in use or otherwise known to Defendants prior to the 2003 dismissal and settlement agreement. Dismissal of the counterclaims on the basis of laches is thus inappropriate at this pleading stage.
The motion to dismiss counterclaims I through V is, accordingly, denied in its entirety.
SO ORDERED.