Opinion
00 Civ. 4314 (MBM)
August 28, 2001
JAMES K. STRONSKI, ESQ., WILLIAM S. FROMMER, ESQ., Frommer, Lawrence Haug, New York, NY, Attorneys for Plaintiff.
MICHAEL ASEN, ESQ., Olonoff Asen Olonoff, New York, NY, Attorney for Defendants.
OPINION AND ORDER
Plaintiff Nolan Miller, a women's clothing designer, sues Forge Mench Partnership ("Forge Mench") and Forge Industries, Inc. for trademark infringement, unfair competition, breach of contract and to enforce a guarantee. Defendants counterclaim for breach of contract, negligent misrepresentation and unjust enrichment. Plaintiff moves for summary judgment with respect to his breach of contract claim and his action on the guarantee. He moves also for summary judgment dismissing defendants' counterclaims. For the reasons set forth below, plaintiff's motion is granted.
I.
The following facts are not in dispute. The parties executed a license agreement dated August 28, 1998 (the "License Agreement") granting Forge Mench a license to use the Nolan Miller trademark. (21. Rule 56.1 Statement ¶ 1) Section 8(b) of the License Agreement provides for payment by Forge Mench in the form of a "Guaranteed Minimum Fee," which was to be paid as follows:
The Guaranteed Minimum Fee for each Annual Period shall be paid in four equal quarterly installments (each a "Quarterly Minimum Fee Payment") on the first day of each July, October, January and April during such Annual Period, except that, during the first Annual Period, the Guaranteed Minimum Fee shall be paid as follows: $25,000 on the date of this Agreement and the remainder in four installments of $12,500 each, payable on January 1, 1999, April 1, 1999, July 1, 1999 and October 1, 1999.
(Stronski Decl., Ex. 1) (emphasis in original)
Section 2(a) of the License Agreement further provides that "[t]heAnnual Period" shall be from January 1 to the next succeeding December 31, except that the first Annual Period shall be from the date of this Agreement to December 31, 1999 (or the termination date of this Agreement, if earlier) and the final Annual Period shall be from the last January 1 during the term of this Agreement to the termination of this Agreement." (Id.) (emphasis in original)
Forge Industries guaranteed Forge Mench's payments under the License Agreement. That guarantee states:
Forge Industries, Inc. (the "Guarantor") hereby unconditionally guarantees to Licensor [Nolan Miller], its successors and assigns, the prompt payment in full when due all financial obligations of Licensee [Forge Mench] under this Agreement, including, without limitation, payment of the fees and amounts set forth in paragraph 8 hereof.
(Id.) (emphasis in original)
Forge Mench paid Nolan Miller $25,000 upon the execution of the License Agreement, and made four additional payments of $12,500 each on January 1, 1999, April 1, 1999, July 1, 1999 and October 1, 1999. (P1. Rule 56.1 Statement ¶ 8) Forge Mench made no payment to plaintiff on January 1, 2000. (Id. at ¶ 9) Plaintiff sent Forge Mench letters dated January 20, 2000 and February 2, 2000 demanding payment under the License Agreement and warning that, if payment was not received, the License Agreement would be terminated. (Id. at ¶ 15) Payment was not received, and plaintiff terminated the License Agreement on February 9, 2000. (Id.)
II.
Plaintiff argues that he is entitled to summary judgment as to the contract claim because Forge Mench breached the License Agreement by failing to make a quarterly payment on January 1, 2000. The License Agreement states that it is to be construed in accordance with New York law. (See Stronski Decl., Ex. 1) Under New York law, words and phrases in a contract are given their plain meaning. See Tigue v. Commercial Life Ins. Co., 631 N.Y.S.2d 974, 975 (4th Dep't 1995). Moreover, where the contract is unambiguous, interpretation is a matter of law, and a claim turning on interpretation may be determined by summary judgment. See Painewebber, Inc. v. Bybyk, 81 F.3d 1193, 1199 (2d Cir. 1996) (citingAmerican Express Bank Ltd. v. Uniroyal, Inc., 164 A.D.2d 275, 277, 562 N.Y.S.2d 613, 614 (1st Dep't 1990).
Here, the License Agreement is unambiguous as to the timing of payments. Section 8(b) of the License Agreement provides that payments made after the first Annual Period "shall be paid in four equal quarterly installments . . . on the first day of each July, October, January and April during such Annual Period . . . ." (Stronski Decl., Ex. 1) (emphasis added) Moreover, § 2(a) of the License Agreement defines "Annual Period" as "January 1 to the next succeeding December 31 . . . ." (Id.) Taken together, these provisions unambiguously require Forge Mench to make quarterly payments on January 1, April 1, July 1 and October 1 of each Annual Period, which runs from January 2. through December 31. Accordingly, Forge Mench's failure to make a quarterly payment on January 1, 2000 was a breach of the License Agreement.
Defendants argue that the License Agreement is ambiguous as to the timing of payments. According to defendants, because § 8(b) of the License Agreement lists the months on which quarterly payments are due as "July, October, January and April," the License Agreement reasonably could be read to mean that the first quarterly payment for an Annual Period subsequent to the first Annual Period is due in July, and that the remaining three payments for that Annual Period are due the following October, January and April. However, defendants ignore both the definition of "Annual Period" in § 2(a) of the License Agreement, which specifically defines the Annual Period as "January 1 to the next succeeding December 31 . . .", and the requirement in § 8(b) that payments be made on the first day of "each" quarter. (Stronski Decl., Ex. 1) In view of that definition and that requirement, § 8(b) of the License Agreement is unambiguous and is susceptible to only one interpretation —— i.e., that quarterly payments for an Annual Period begin in January, and that the remaining payments are due the following April, July and October. The fact that § 8(b) lists the months in which payments are due as "July, October, January and April," does not render that section ambiguous, especially in view of the definition of "Annual Period" contained in § 2(a).
Defendants rely also on parol evidence to support their interpretation of the License Agreement. However, parol evidence may be considered only when the language of a contract is ambiguous. See Parochial Bus Systems, Inc. v. Board of Education, 91 A.D.2d 13, 17, 457 N.Y.S.2d 285, 288 (1st Dep't 1983). Here, as discussed, the License Agreement is unambiguous with respect to the timing of payments. Accordingly, defendants' parol evidence is inadmissible, and plaintiff is entitled to summary judgment on his breach of contract claim.
III.
Plaintiff also is entitled to summary judgment against Forge Industries on the guarantee contained in License Agreement. As discussed, the License Agreement provides:
Forge Industries, Inc. (the "Guarantor") hereby unconditionally guarantees to Licensor [Nolan Miller], its successors and assigns, the prompt payment in full when due all financial obligations of Licensee [Forge Mench] under this Agreement, including, without limitation, payment of the fees and amounts set forth in paragraph 8 hereof.
(Id.) (emphasis in original)
Under New York law, in an action on a guarantee, a prima facie case is established through proof of the instruments sued upon and proof of non-payment. See European American Bank Trust Co. v. Schirripa, 108 A.D.2d 684, 485 N.Y.S.2d 763 (1st Dep't 1985). Here, Forge Industries does not dispute that it was Forge Mench's guarantor under the License Agreement, nor that the guarantee is legal and binding. (See Stronski Delc., Ex. 2) Accordingly, plaintiff is entitled to summary judgment on this claim.
IV.
Plaintiff also is entitled to summary judgment dismissing defendants' counterclaims. With respect to the breach of contract counterclaim, defendants argue that summary judgment is inappropriate because plaintiff wrongfully terminated the License Agreement on February 9, 2000. However, as discussed, Forge Mench breached the License Agreement by failing to make a quarterly payment by January 1, 2000. Accordingly, plaintiff was permitted to terminate under § 14(a) of the License Agreement. Defendants' breach of contract counterclaim therefore is without merit.
Section 14(a) of the License Agreement provides, in relevant part, that "[i]f Licensee shall otherwise fail to perform any of the terms, conditions, agreements, or covenants in this Agreement on its part to be performed and such default shall continue uncured for a period of 15 days after Notice of Default has been given by Licensor, Licensor may, at his sole election, terminate this Agreement, which termination may be automatic upon notice thereof in the Notice of Default or in any subsequent notice to Licensee." (Stronski Decl., Ex. 1)
Plaintiff also is entitled to summary judgment dismissing the negligent misrepresentation counterclaim. Under New York law, negligent misrepresentation consists of: (1) carelessness in imparting words (2) upon which others were expected to rely, (3) on which they did justifiably rely (4) to their detriment; and (5) the author must express words directly to one whom the author is bound by some relation of duty or care. See White v. Guarente, 43 N.Y.2d 356, 431 N.Y.S.2d 474 (1977). Here, defendants have failed even to allege a single misrepresentation by plaintiff. Accordingly, defendants' negligent misrepresentation claim is without merit.
Plaintiff is entitled to summary judgment dismissing defendants' unjust enrichment counterclaim as well. In order to recover for unjust enrichment, a claimant must establish (1) that the defendant was enriched; (2) that such enrichment was at plaintiff's expense; and (3) that equity and good conscience demand that the defendant return the money or property to the plaintiff. See Dolmetta v. Unitah Nat'l Corp., 712 F.2d 15, 19 (2d Cir. 1983). Once again, defendants have failed even to allege the basic elements of this counterclaim. Moreover, the only basis for this counterclaim appears to be plaintiff's alleged wrongful termination of the License Agreement. (See Stronski Decl., Ex. 2, at 141-43) Because plaintiff properly terminated the License Agreement, defendants' unjust enrichment counterclaim is without merit.
* * *
For the reasons set forth above, plaintiff's motion for summary judgment is granted. Counsel are directed to confer on the issue of damages, and to submit an agreed-upon judgment, failing which they should request a conference to resolve that issue.