In re Houbigant, Inc.

• Decision Date: 17 October 1995
• Docket Number: No. 95 Civ. 2467 (RWS).,95 Civ. 2467 (RWS).
• Citation: 914 F. Supp. 964
• Parties: In re HOUBIGANT, INC., et al., Debtors. HOUBIGANT, INC. and Parfums Parquet, Inc., Plaintiffs, v. ACB MERCANTILE, INC., ACB Fragrances and Cosmetics, Inc., Giacomo Giuliano, Augustine Celaya and Gilles Pellerin, V & B Distributors, Canada, Inc., Harold Schiff, A. Rosenblum Sales, Inc., and Rosenblum, Defendants. ACB MERCANTILE, INC. and ACB Fragrances and Cosmetics, Inc., Counterclaim-Plaintiffs, v. HOUBIGANT, INC., Parfums Parquet, Houbigant, (1995) Ltd. (f.k.a. 3088766) Canada, Ltd., Michael Sherman, Luigi Massironi, Robert Graber, Thomas Bonoma, Renaissance Cosmetics, Inc., Kidd Kamm & Company, CTC International Group, Ltd., Brad Robinson and Chemical Bank New Jersey, N.A. (as agent for itself and National Westminster Bank U.S.A.), Counterclaim Defendants.
• Court: U.S. District Court — Southern District of New York

914 F. Supp. 964

In re HOUBIGANT, INC., et al., Debtors.

HOUBIGANT, INC. and Parfums Parquet, Inc., Plaintiffs, v.ACB MERCANTILE, INC., ACB Fragrances and Cosmetics, Inc., Giacomo Giuliano, Augustine Celaya and Gilles Pellerin, V & B Distributors, Canada, Inc., Harold Schiff, A. Rosenblum Sales, Inc., and Rosenblum, Defendants.

ACB MERCANTILE, INC. and ACB Fragrances and Cosmetics, Inc., Counterclaim-Plaintiffs, v.HOUBIGANT, INC., Parfums Parquet, Houbigant, (1995) Ltd. (f.k.a. 3088766) Canada, Ltd., Michael Sherman, Luigi Massironi, Robert Graber, Thomas Bonoma, Renaissance Cosmetics, Inc., Kidd Kamm & Company, CTC International Group, Ltd., Brad Robinson and Chemical Bank New Jersey, N.A. (as agent for itself and National Westminster Bank U.S.A.), CounterclaimDefendants.

No. 95 Civ. 2467 (RWS).

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

October 17, 1995.

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Kaye, Scholer, Fierman Hays & Handler(Karen E. Katzman, Thomas A. Smart, Scott M. Berman, Elizabeth Forman, Yoon Hi Greene, of counsel), New York City, for Plaintiff/Counterclaim DefendantsMichael Sherman, Luigi Massironi and Robert Graber.

Parker Chapin Flattau & Klimpl, LLP(Stephen G. Rinehart, Barry J. Brett, Michael D. Friedman, Gilbert C. Hoover, IV, of counsel), New York City, for Plaintiff/Counterclaim Defendants Parfums Parquet, Houbigant Ltee, Thomas Bonoma, Renaissance Cosmetics, Kidd Kamm, CTC Intl. and Brad Robinson.

Stroock, Stroock & Lavan(Brian M. Cogan, James A. Shifren, of counsel), New York City, for Counterclaim Defendant Chemical Bank.

Marcus Montgomery Wolfson, P.C.(Sam P. Israel, Lisa Buckley, of counsel), New York City, for defendantACB Mercantile Inc.

OPINION

SWEET, District Judge.

The ACB Defendants¹ have moved to dismiss the complaint of Plaintiff/Debtor Houbigant, Inc.("Houbigant").Houbigant and Plaintiff PPI have each moved to dismiss all of the counterclaims asserted against them by ACB.Counterclaim-Defendant Chemical Bank ("Chemical") has moved to dismiss the claim asserted against it by ACB.For the reasons discussed herein, the motions are denied in part and granted in part.

Parties

Houbigant is a corporation organized and existing under the laws of Delaware, with its principal place of business in New York, New York.Houbigant is the parent of a group of domestic and foreign companies which marketed and distributed perfumes and toiletries worldwide.On November 18, 1993(the "Filing Date"), Houbigant and certain of its affiliates (collectively the "Debtors") filed voluntary petitions in this District for relief under Chapter 11 of the Bankruptcy Code.Since that time they have continued in possession and control of their businesses and assets as debtors in possession.Since filing the petition, Houbigant discontinued its design, marketing and distribution operations and became a trademark licensor.In re Houbigant, Inc.,182 B.R. 958(Bankr. S.D.N.Y.1995).

PlaintiffParfums Parquet, Incorporated("PPI") is a corporation organized and existing under the laws of Delaware, with its principal place of business in New York, New York.On June 2, 1994the Bankruptcy Court authorized Houbigant to implement and effectuate a license agreement with PPI².In exchange for royalty payments, Houbigant granted to PPI the exclusive right and license in "the Territory³" to: a) manufacture in the Territory the Products covered by the Trademarks (the "Licensed Products"); b) distribute, use and sell throughout the Territory the Licensed Products; and c) use the Trademarks in conjunction with the Licensed Products and all advertising and letterheads and collateral promotional material in the Territory.PPI was Houbigant's exclusive United States licensee.

DefendantACB Mercantile, Inc.("ACB Mercantile") is a Canadian corporation with its principal place of business in Quebec, Canada.

DefendantACB Fragrances and Cosmetics, Inc.("ACB Fragrances") is a Canadian corporation with its principal place of business in Quebec, Canada.ACB Mercantile and ACB Fragrances are collectively referred to as "ACB companies."ACB companies are Houbigant creditors in the Bankruptcy proceedings.ACB Fragrances and Houbigant entered into a series of agreements in April 1993 by which Houbigant granted ACB Fragrances an exclusive license to manufacture, sell, and distribute certain Houbigant products in Canada.An asset purchase agreement dated December 12, 1994(the "Asset Purchase Agreement") conveyed ACB Fragrance's business to Counterclaim Defendant PPI-Canada, a Canadian affiliate of plaintiff PPI.

DefendantAugustine Celaya("Celaya"), an officer and principal shareholder of ACB Mercantile, is an individual residing in Texas.

DefendantGiacomo Giuliano("Giuliano"), an officer and principal shareholder of ACB Mercantile, is an individual residing in Quebec.

DefendantGilles Pellerin("Pellerin"), an officer and principal shareholder of ACB Mercantile, is an individual residing in Quebec.

Counterclaim Defendant PPI-Canada is a Canadian corporation and a wholly-owned subsidiary of plaintiff, PPI.According to the Counterclaims, PPI-Canada has offices in Cambridge, Massachusetts and transacts business both directly and through its parent-corporations, PPI and Renaissance, within the Southern District of New York.

Counterclaim DefendantRenaissance Cosmetics Inc.("Renaissance"), is a corporation engaged in various aspects of the fragrance business and owns all of the common stock of plaintiff, PPI.Renaissance conducts substantial business in New York.

Counterclaim DefendantKidd Kamm & Co.("Kidd Kamm") is a Connecticut company, and an affiliate of Renaissance, PPI and PPI-Canada.Kidd Kamm creates and invests in entities that manufacture and distribute fragrances in the United States and abroad and it conducts substantial business with this District.Kidd Kamm, PPI, PPI-Canada and Renaissance are referred to collectively as the PPI Entities.

Counterclaim DefendantLuigi Massironi("Massironi") is the Chief Operating Officer of Houbigant.Massironi joins the motion to dismiss ACB's counterclaims, while reserving his right to contest service.

Counterclaim DefendantMichael Sherman("Sherman") is a reorganization specialist and is Executive Vice President of Houbigant in charge of bankruptcy matters.Sherman joins the motion to dismiss ACB's counterclaims, while reserving his right to contest service.Plaintiffs allege that Sherman was not and was not alleged to be associated with Houbigant prior to the Filing Date, November 18, 1993.

Counterclaim DefendantThomas Bonoma("Bonoma") is Chairman and Chief Executive Officer of Renaissance and Chairman of PPI.

Counterclaim Defendant Chemical (as agent for itself and National Westminster Bank U.S.A.) is a banking corporation that conducts business worldwide.The Counterclaims allege that Chemical holds a security interest in most if not all of Houbigant's assets, including the alleged trademarks that are the subject of this action and have been actively involved in the day to day management of Houbigant's business affairs since at least October 1993.

Counterclaim DefendantRobert Graber("Graber") was the Chief Financial Officer of Houbigant until January 1995.

Counterclaim DefendantCTC International Group, Ltd.("CTC") is a detection and surveillance company, which maintains an office in West Palm Beach, Florida.

Counterclaim DefendantBrad Robinson("Robinson") is an employee of CTC.

Prior Proceedings

Houbigant and PPI filed an adversary proceeding in Bankruptcy Court in the Southern District of New York on April 4, 1995 pursuant to section 105(a) of Title 11 of the United States Code, alleging violations of the Lanham Act, various statutes of the State of New York and the common law, seeking damages and to enjoin the ACB defendants from infringing upon rights in certain Houbigant trademarks, unfair competition and injuring their business reputations or diluting the distinctive quality of the trademarks.

On April 11, 1995the defendants moved to withdraw the reference to the District Court.By order to show cause, signed on April 11, 1995, the motion was set for hearing on April 14, 1995.On April 14, the parties appeared before this Court, and an order was entered postponing argument on the motion until May 3, 1995⁴.

On May 5, PPI's affiliate, PPI-Canada, commenced an action against ACB in Canada alleging that ACB sold products infringing Houbigant's trademarks.

On May 17, 1995, the parties appeared before the Court and the motion to withdraw adversary proceeding from the Bankruptcy Court was granted, with no opposition voiced, on consent of all parties.

On May 26, 1995, the plaintiffs filed the First Amended Complaint (the "Complaint"), no answer having yet been filed by the defendants.The complaint recites seventeen claims and names the ACB companies, Celaya, Giuliano, Pellerin, V & B Distributors, Harold Schiff, A. Rosenblum Sales, Inc., and Bernard Rosenblum as defendants.

By Order of the Bankruptcy Court dated June 14, 1995, Houbigant's "Third Amended Joint Disclosure Statement Under Section 1125 of the Bankruptcy Code," was approved, and Houbigant and its affiliated debtors were authorized to commence the process of soliciting acceptances of the Plan.

On June16, 1995 ACB filed an answer and counterclaims against Houbigant, PPI, and third-party defendantsLuigi Massironi, Robert Grabet, Thomas Bonoma, Renaissance, PPI Canada (a wholly owned subsidiary of plaintiff PPI), Kidd Kamm & Company, CTC International Group, Brad Robinson, Chemical, and Michael Sherman.These third-party defendants are not parties in the bankruptcy proceeding.The seventeen Counterclaims allege fraud against Houbigant, Massironi, Sherman and Graber (Count I), violations of the Canadian Trademark Act against Houbigant (Count...