Helios Int'l S.A.R.L. v. Cantamessa USA, Inc.

• Decision Date: 20 May 2014
• Docket Number: No. 12 Civ. 8205.,12 Civ. 8205.
• Citation: 23 F.Supp.3d 173
• Court: U.S. District Court — Southern District of New York
• Parties: HELIOS INTERNATIONAL S.A.R.L. and Idea Italiana s.r.l., Plaintiffs, v. CANTAMESSA USA, INC., Fabrizio Cantamessa, and Robert Kheit, Defendants.

23 F.Supp.3d 173

HELIOS INTERNATIONAL S.A.R.L. and Idea Italiana s.r.l., Plaintiffs
v.
CANTAMESSA USA, INC., Fabrizio Cantamessa, and Robert Kheit, Defendants.

No. 12 Civ. 8205.

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

Signed May 20, 2014.
Filed May 21, 2014.

23 F.Supp.3d 174

Oberdier Ressmeyer LLP, by: Carl W. Oberdier, Esq., Kellen G. Ressmeyer, Esq., New York, NY, for Plaintiffs.

Cowan, Liebowitz & Latman, P.C., by: J. Christopher Jensen, Esq., Scott P. Ceresia, Esq., New York, NY, for Defendants.

OPINION

SWEET, District Judge.

Plaintiffs Idea Italiana s.r.l. (“Idea” or “Idea Italiana”) and Helios International S.A.R.L. (“Helios”) (collectively, “Plaintiffs”) have moved pursuant to Rule 56 of the Federal Rules of Civil Procedure and Local Rule 56.1 for partial summary judgment on their claims of conversion of 112 pieces of Cantamessa jewelry (the “Jewelry”) by Defendants Cantamessa USA, Inc. (“Cantamessa USA”), Fabrizio Cantamessa (“Fabrizio”) and Robert Kheit (“Kheit”) (collectively, “Defendants”). The Defendants have moved pursuant to Rule 12(b)(6) for partial dismissal of the Plaintiffs' Amended Complaint (“AC”) and for sanctions pursuant to Rule 11. Based upon the conclusions set forth below, the Plaintiffs' motion for partial summary judgment is denied, the Defendants' motion to dismiss the Racketeering Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962 (“RICO”) and common-law fraud claims of the AC are granted, and the motion for sanctions is denied with leave granted to renew upon a resolution of the action.

This action involved the understandings and misunderstandings between the parties concerning the promotion and sale of jewelry in an industry which is characterized by trust and recognized practices. It is a demonstration of the difficulties presented when that trust is destroyed.

Prior Proceedings

The Plaintiffs' initial complaint was filed on November 9, 2012 (the “Complaint”), asserting RICO, 18 U.S.C. § 1962 (Counts 1–4); copyright infringement under the U.S. Copyright Act, 17 U.S.C. §§ 106(1) –(3) (Count 5); trademark infringement under the Lanham Act, 15 U.S.C. § 1125 (Count 6); trademark dilution under the Lanham Act, 15 U.S.C. § 1125 (Count 7);

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false designation under the Lanham Act, 15 U.S.C. § 1125(a) (Count 8); cancellation of federal registration under the Lanham Act, 15 U.S.C. § 1119 (Count 9); state statutory and common law trademark infringement under the Trademark Act of New York, Gen. Bus. L. 360–1 and the common law of each of the fifty states (Count 10); conversion (Count 11); common law fraud (Count 12); trespass to chattels (Count 13); breach of fiduciary duty (Count 14); misappropriation of trade secrets (Count 15); unfair competition (Count 16); and breach of the New York Consumer Protection Act (“NYCPA”) § 349 (Count 17). On January 18, 2013, the Defendants moved for partial dismissal; on July 31, 2013, Defendants' motion to dismiss was granted and Counts 1–4, 7, 12, and 17 were dismissed. See Helios Intern. S.A.R.L. v. Cantamessa USA, Inc., 2013 WL 3943267 (S.D.N.Y. July 31, 2013) (the “July 31 Opinion”).

The Plaintiffs filed the AC on September 3, 2013, and the instant motions followed. They were heard and marked fully submitted on January 15, 2014.

The AC

As in the initial Complaint, all six putative RICO predicate acts in the AC arise from the same business transactions underlying Plaintiffs' separately pled claims for copyright and trademark infringement, breach of fiduciary duty, conversion, and trespass to chattel. AC ¶¶ 201–272.

The AC includes a repetition of the operative facts initially alleged in the original Complaint. The principal changes in the AC include a revision to the number of “stolen” jewelry pieces. Initially, it was alleged that Defendants had physically “stolen” 185 pieces of jewelry from the Malca–Amit Geneva warehouse in 2011. The AC reduced the number of allegedly “stolen” pieces to 49, and alleged that this “theft” at the warehouse was accomplished through third-party “agents” under Defendants' control. AC ¶¶ 20, 74.

The AC reduced the amount of proceeds allegedly due from the sale of 124 jewelry pieces during the period of March 2010 through December 2010 from $902,406.30 to $834,706.82, due from the disposition of 94 pieces of jewelry that were sent by Defendants to customers in the year 2010. 78 of these pieces were allegedly given by Defendants to their Russian customer Botticelli Jewelry House (“Botticelli”) which thereafter remitted a payment to Helios of $611,464.96. The AC also alleges that Defendants did not maintain proper recordkeeping with respect to the jewelry pieces removed from the warehouse.

In connection with their allegation of “criminal” copyright infringement under § 2319, Plaintiffs increased the number of allegedly infringing jewelry pieces from 27 to 120, with a corresponding increase in their total net value from $270,000 to $1.5 million.

It is also alleged that Kheit committed customs violations involving declarations as to the jewelry's place of manufacture, the alleged importation of rubies, and the fair market value of imported jewelry.

The RICO claims plead the same six “predicate” acts that were alleged in their original Complaint regarding the alleged “theft” of jewelry, marketing and sale of allegedly “stolen” jewelry, and/or infringement allegations, namely: (1) “Transportation of Stolen Goods”; (2) “Sale of Stolen Goods”; (3) “Laundering of Money Instruments”; (4) “Interstate and Foreign Travel or Transportation in Aid of Racketeering Enterprises”; (5) “Criminal Copyright Infringement”; and (6) “Mail and Wire Fraud.”

The Facts

The facts have been set forth in the Plaintiffs' Local Rule 56.1 Statement of

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Material Facts, the Defendants' Rule 56.1 Counter–Statement of Disputed Material Facts and Statement of Additional Disputed Material Facts, and the Plaintiffs' Reply to Defendants' Rule 56.1 Counter–Statement. Any disputes between parties are noted.

Idea and Helios manufacture, sell and distribute jewelry bearing the trademark Cantamessa, but Fabrizio is the owner of the Cantamessa trademark, which is his family name under Italian law. Cantamessa USA is the record owner of the Cantamessa trademark in the United States. Fabrizio is one of the designers of the Cantamessa jewelry designs subject to Idea Italiana's copyright registrations and therefore may use, and authorize others to use, jewelry pieces embodying those proprietary designs.

Helios is a limited liability company organized under the laws of Tunisia, with its principal office located at Immueble La Coupole—Rue Du Lac Windermere—Les Berges Du Lac, 1053 Tunis, Tunisia.

Idea is a limited liability company organized under the laws of Italy, with its principal office currently located at Via Gillio 18, Valenza (AL), Italy 15048.

The Defendants Fabrizio and Kheit were engaged by Helios to market and sell Plaintiffs' Cantamessa Jewelry. Defendants allege that an oral contract was entered into in 2010 with Giuseppe Giachino (“Giachino”), who controlled and managed the Plaintiffs, to provide the funding for marketing and development expenses involved in the Cantamessa brand expansion and to regularly produce the jewelry in response to customer orders procured by Kheit (the “Cantamessa Contract”).

According to the Plaintiffs, in September 2010, Fabrizio and Kheit incorporated Cantamessa USA, a New York corporation. Defendants submit that Plaintiffs had contemporaneous knowledge of the establishment of Cantamessa. Kheit's incorporation of Cantamessa USA was meant to serve as the U.S. arm of the expanded Cantamessa business with the consent of Fabrizio.

According to the Plaintiff, since incorporating Cantamessa USA, Defendants have admitted that Cantamessa Jewelry is “unique,” and the product of “proprietary” jewelry designs, “never-seen-before techniques” and “one of a kind” jewels. According to the Defendants, Fabrizio and Kheit are authorized to sell, and have sold, jewelry bearing the trademark Cantamessa, but denied having sold their own “Cantamessa” jewelry through Cantamessa USA to the extent that it implies that the Cantamessa jewelry sold by Cantamessa USA was counterfeit or otherwise non-genuine. Defendants allege that Fabrizio and Cantamessa USA are the record owners of trademark registrations for the Cantamessa trademark in Italy and the United States, respectively and that Fabrizio is one of the designers of the Cantamessa jewelry designs subject to Idea Italiana's fraudulently obtained copyright registrations and therefore may use, and authorize others to use, jewelry pieces embodying those proprietary designs. Defendants deny that Plaintiffs own all of the subject jewelry pieces and allege that a significant number of the 112 jewelry pieces that are the subject of this motion were part of the inventory of Cantamessa jewelry owned by the International Group of Jewelers (“IGJ”) and sent to Helios in 2009, and/or were manufactured by Delora Co., Ltd....