L & L WINGS, INC. v. MARCO-DESTIN, INC.

• Decision Date: 16 December 2009
• Docket Number: No. 07 Civ. 4137(BSJ)(GWG).,07 Civ. 4137(BSJ)(GWG).
• Citation: 676 F. Supp.2d 179
• Parties: L & L WINGS, INC., Plaintiff, v. MARCO-DESTIN, INC., 1000 Highway 98 East Corp., Panama Surf & Sport, Inc., and E & T, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

676 F.Supp.2d 179

L & L WINGS, INC., Plaintiff, v. MARCO-DESTIN, INC., 1000 Highway 98 East Corp., Panama Surf & Sport, Inc., and E & T, Inc., Defendants.

No. 07 Civ. 4137(BSJ)(GWG).

United States District Court, S.D. New York.

December 16, 2009.

Bennett David Krasner, The Law Offices of Bennett D. Krasner, Atlantic Beach, NY, Diane C. Hertz, Richard S. Taffet, John Paul Son, Bingham McCutchen LLP, New York, NY, for Plaintiff and Counter Defendant.

Brent G. Wolmer, Cohen, Norris, Scherer, Weinberger & Wolmer, North Palm Beach, FL, Jerold Ira Schneider, Akerman Senterfitt, West Palm Beach, FL, John Clifton Vetter, Novka Druce & Quigg LLP, West Palm Beach, FL, Scott Michael Kessler, Akerman Senterfitt, LLP, New York, NY, for Defendants.

Order

BARBARA S. JONES, District Judge.

On May 28, 2007, Plaintiff L & L Wings, Inc. ("Wings" or "Plaintiff") filed suit against Defendants Marco-Destin, Inc., 1000 Highway 98 East Corp., Panama Surf & Sport, Inc., and E & T, Inc. (collectively "Defendants") alleging breach of contract, trademark infringement under the Lanham Act, violations of the New York General Business Law, and common law service mark infringement and unfair competition. On September 4, 2008, Plaintiff filed a Motion for Partial Summary Judgment. On October 15, 2008, Defendants filed a Cross Motion for Partial Summary Judgment. For the reasons set forth below, Plaintiff's Motion for Partial Summary Judgment is GRANTED and Defendants' Cross Motion for Partial Summary Judgment is DENIED.

BACKGROUND¹

Plaintiff L & L Wings, a South Carolina corporation, is the owner of a chain of retail stores operating under the trademark "Wings." The stores specialize in the sale of beachwear, souvenirs, bathing suits, sunglasses, and related items. (Pl.'s Rule 56.1 Stmt. ¶ 1; Def.'s Rule 56.1 Stmt. ¶ 1.) Plaintiff has, at various times since 1978, operated and managed "Wings" stores in South Carolina, Florida, North Carolina, Massachusetts, Texas, California, New York, Tennessee, New Jersey, and Alabama. (Pl.'s Rule 56.1 Stmt. ¶ 3; Def.'s Rule 56.1 Stmt. ¶ 3.)

Defendants Marco-Destin Inc. ("Marco-Destin"), 1000 Highway 98 East Corp. ("Highway 98"), and Panama Surf & Sport, Inc. ("Panama") are each Florida corporations. Defendant E & T Inc. ("E & T") is a South Carolina corporation. While there is some dispute regarding the exact nature of the four Defendants relationship, Defendants contend that Marco-Destin and E & T operate retail stores selling beachwear and accessories, Panama provides senior management consulting services to Marco-Destin and E & T, and Highway 98 is a landlord to Marco-Destin. (Def's Opp'n Mem. At 38-39). According to Eli Tabib, owner of TLE Management, LLC, each of the defendants is owned by TLE Management, LLC. (Pl.'s Rule 56.1 Stmt. ¶ 4; Def.'s Rule 56.1 Stmt. ¶ 4.) Since November 1, 1998, the four defendants have shared nearly identical corporate officers, directors and main office employees. (Pl.'s Rule 56.1 Stmt. ¶ 6; Def.'s Rule 56.1 Stmt. ¶ 6.)

In 1977, Plaintiff's principals, Shaul and Meir Levy, opened their first beachwear and accessories store in Myrtle Beach, South Carolina, which they named "Wings" (the "Mark"). (Pl.'s Rule 56.1 Stmt. ¶ 9; Def.'s Rule 56.1 Stmt. ¶ 9.) Plaintiff has also used a trade dress consisting of a unique wave sculpture design highlighted with a colored neon light combination (the "Trade Dress") to be placed on the roof of some Wings stores. (Pl.'s Rule 56.1 Stmt. ¶ 11; Def.'s Rule 56.1 Stmt. ¶ 11.)

Prior to 1998, Plaintiff's principals, Shaul and Meir Levy, owned 50% of three of the four Defendant corporations, namely Marco-Destin, Highway 98, and Panama. The remaining 50% interest of these companies was owned by Eli Tabib. (Pl.'s Rule 56.1 Stmt. ¶ 16; Def.'s Rule 56.1 Stmt. ¶ 16.) In 1998, Shaul Levy, Meir Levy, and Eli Tabib mutually agreed to redefine their business relationships and transfer 100% ownership of Marco-Destin, Highway 98, and Panama to Eli Tabib. (Pl.'s Rule 56.1 Stmt. ¶ 17; Def.'s Rule 56.1 Stmt. ¶ 17.) Mr. Tabib retained the New York law firm of Moses & Singer LLP to represent him during this transaction. (Pl.'s Rule 56.1 Stmt. ¶ 19; Def.'s Rule 56.1 Stmt. ¶ 19.) Mr. Tabib is an experienced businessman who has built numerous companies from the ground up in areas such as retail, real estate, and wedding/reception services. Mr. Tabib also owns a professional soccer team in Israel. (Pl.'s Rule 56.1 Stmt. ¶ 20; Def.'s Rule 56.1 Stmt. ¶ 20.)

Between November 1, 1998 and February 17, 2000, the parties' principals and respective counsels negotiated the agreements and documentation to formalize their business relationship. These included a Purchase Agreement, an Assignment/Surrender and Assumption of Leases, Promissory Notes, Consulting Agreements, and a Licensing Agreement, dated February 17, 2000. (Pl.'s Rule 56.1 Stmt. ¶ 25; Def.'s Rule 56.1 Stmt. ¶ 25.)

The Licensing Agreement (the "Agreement") details the Defendants' rights to use Plaintiff's Mark and Trade Dress in connection with the sale of beachwear and accessories at Defendants' business establishments. (Pl.'s Rule 56.1 Stmt. ¶ 26; Def.'s Rule 56.1 Stmt. ¶ 26.) During the course of negotiations, several different finite periods for the license were proposed. (Pl.'s Rule 56.1 Stmt. ¶ 29; Def.'s Rule 56.1 Stmt. ¶ 29.) The final Licensing Agreement included a term of eight years, effective from November 1, 1998 through October 31, 2006. (Pl.'s Rule 56.1 Stmt. ¶ 30; Def.'s Rule 56.1 Stmt. ¶ 30.)

On February 17, 2000, counsel for Shaul Levy, Meir Levy, and Eli Tabib held a closing for each of the agreements at the offices of Moses & Singer in New York City. (Pl.'s Rule 56.1 Stmt. ¶ 32; Def.'s Rule 56.1 Stmt. ¶ 32.) Shaul Levy and Eli Tabib were in Miami, Florida on February 17, 2000, at the time of the closing. They each participated in the closing from the office in the Wings' Miami store while in telephone contact with their respective counsel in New York. (Pl.'s Rule 56.1 Stmt. ¶ 33; Def.'s Rule 56.1 Stmt. ¶ 33.) Eli Tabib signed the signature page for each agreement on behalf of the four Defendant corporations and returned the documents by facsimile. Shaul Levy signed the signature page of each agreement on behalf of the Plaintiff except for the Licensing Agreement, which was inadvertently overlooked, on behalf of the Plaintiff and returned the documents by facsimile as well. (Pl.'s Rule 56.1 Stmt. ¶ 35; Def.'s Rule 56.1 Stmt. ¶ 35.) After realizing the oversight, Meir Levy signed the Licensing Agreement in New York later that day. (Pl.'s Rule 56.1 Stmt. ¶ 36; Def.'s Rule 56.1 Stmt. ¶ 36.)

At the time the documents were signed, Eli Tabib's attorney and accountant were both aware that the Licensing Agreement contained a termination date of October 31, 2006. (Pl.'s Rule 56.1 Stmt. ¶ 39; Def.'s Rule 56.1 Stmt. ¶ 39.) On March 8, 2000, Moses & Signer sent Eli Tabib and his accountant a closing binder of all of the executed documents, including the fully executed Licensing Agreement. (Pl.'s Rule 56.1 Stmt. ¶ 40; Def.'s Rule 56.1 Stmt. ¶ 40.)

During the period of the Licensing Agreement, Defendants Marco-Destin and E & T used the Mark and/or Trade Dress in connection with the sale of beachwear and accessories in twelve Wings stores, eleven of which currently remain in operation. Defendants Marco-Destin and E & T also used the Mark and/or Trade Dress for outdoor signage, shopping bags, product hang tags, TV signs, and boogie boards. (Pl.'s Rule 56.1 Stmt. ¶ 43; Def.'s Rule 56.1 Stmt. ¶ 43.) During that same period, Plaintiff fully performed its obligations under the Licensing Agreement. (Pl.'s Rule 56.1 Stmt. ¶ 47; Def.'s Rule 56.1 Stmt. ¶ 47.)

According to its written terms, the Licensing Agreement terminated on October 31, 2006. (Pl.'s Rule 56.1 Stmt. ¶ 49; Def.'s Rule 56.1 Stmt. ¶ 49.) On both October 10 and November 9, 2006, Plaintiff reminded Defendant Marco-Destin of the written termination date and advised that Defendants were required to remove signage and all items bearing the Mark and Trade Dress. (Pl.'s Rule 56.1 Stmt. ¶ 50-51; Def.'s Rule 56.1 Stmt. ¶ 50-51.) On February 27, 2006, Plaintiff advised all Defendants that if Defendants did not cease using the Mark and Trade Dress, Plaintiff would pursue legal remedies. (Pl.'s Rule 56.1 Stmt. ¶ 52; Def.'s Rule 56.1 Stmt. ¶ 52.)

Defendants continued to use the Mark and Trade Dress in at least eleven stores in connection with the sale of beachwear and accessories after October 31, 2006. (Pl.'s Rule 56.1 Stmt. ¶ 53; Def.'s Rule 56.1 Stmt. ¶ 53.) After October 31, 2006, Plaintiff received several communications from dissatisfied customers of Defendants' Wings stores, mistakenly believing Defendants' stores to be owned by Plaintiff. (Pl.'s Rule 56.1 Stmt. ¶ 54; Def.'s Rule 56.1 Stmt. ¶ 54.)

LEGAL STANDARD

Rule 56 of the Federal Rules of Civil Procedure provides that a court shall grant a motion for summary judgment "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). "The party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists and that the undisputed facts establish their right to judgment as a matter of law." Rodriguez v. City of New York, 72 F.3d 1051, 1060-61 (2d Cir.1995). The substantive law governing the case will identify those facts that are material and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In determining whether a genuine issue of material fact exists, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith...