Lagniappe Lighting, Inc. v. Bevolo Gas & Elec. Lights, Inc.

• Decision Date: 22 July 2013
• Docket Number: CIVIL ACTION NO. H-11-4538
• Court: U.S. District Court — Southern District of Texas
• Parties: LAGNIAPPE LIGHTING, INC., Plaintiff, v. BEVOLO GAS & ELECTRIC LIGHTS, INC., Defendant.

LAGNIAPPE LIGHTING, INC., Plaintiff,

v.BEVOLO GAS & ELECTRIC LIGHTS, INC., Defendant.

CIVIL ACTION NO. H-11-4538

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

SIGNED: July 22, 2013

MEMORANDUM AND ORDER

Pending before the Court is Defendant Bevolo Gas & Electric Lights, Inc.'s ("Bevolo" or "Defendant") Motion for Partial Summary Judgment ("Motion"). (Doc. No. 34.) After considering the motion, all responses thereto, and the applicable law, the Court finds that Defendant's Motion for Partial Summary Judgment should be GRANTED.

I. BACKGROUND

Lagniappe Lighting, LLC¹ ("Lagniappe" or "Plaintiff") owns a retail store that displays and sells lighting fixtures in Spring, Texas. (Doc. No. 1, Compl. ¶ 7.) Plaintiff also owns a number of online stores through which it sells lighting fixtures, including http://www.frenchquarterlanterns.com and http://www.frenchquarterlighting.com (collectively "French Quarter websites"). (Id. ¶ 8; Doc. No. 52-4, March 18, 2013 Aff. of Jeff Ber ¶ 11.)

Bevolo is a New Orleans, Louisiana company that produces lighting fixtures. (Doc. No. 32, First Am. Answer and Second Am. Countercl. ("Am. Answer") ¶¶ 24-26.) It has beenproducing the lanterns commonly seen throughout the French Quarter of New Orleans since 1945. (Id.) Bevolo owns the registered trademark "French Quarter" in International Class 011 for "lighting fixtures." (Doc. No. 34-1, Trademark Electronic Search System ("TESS") Registration Printout.)²

Sometime in 2004, Plaintiff became an authorized distributor of Bevolo lighting products. (Compl. ¶¶ 13-14; Am. Answer ¶ 27.) Plaintiff sold Bevolo lighting fixtures, as well as other lighting fixtures, through its online store http://www.frenchquarterlanterns.com. (Compl. ¶¶ 12-13; Am. Answer ¶ 28.) Lagniappe began using the http://www.frenchquarterlanterns.com domain in 2004, though parties dispute whether Lagniappe began using that domain only after it became an authorized distributor of Bevolo products. (Compare Compl. ¶¶ 12-13 with Am. Answer ¶ 28.)³

On September 29, 2011, Bevolo terminated the distributorship relationship. (Doc. No. 34-2, Termination Letter.)⁴ Bevolo sent a letter to Lagniappe indicating that the termination was "effective immediately," and that Lagniappe was "no longer authorized to act as a distributor of Bevolo products in any manner." (Id. at 1.) As part of this termination, Bevolo demanded that Lagniappe immediately:

1. [C]ease and desist from any further dispensing, providing, marketing, sale, lease, or other distribution[] of any Bevolo goods or services;

2. [R]emove any and all Bevolo marks including, without limitation, the word "Bevolo" (collectively "Bevolo Marks") from any and all visible locations in and around all of [Lagniappe's] places of business;3. [C]ease and desist from using any of the Bevolo Marks in any way in connection with any web sites that [Lagniappe] own[s] and/or administer[s] . . . ; and

4. [R]emove all photographs, drawings, or other images depicting any Bevolo goods or services from all brochures, web sites and/or other promotional materials of any kind or character, and delete all electronically stored photographs, drawings or other images from all computers, hard drives and/or temporary storage devices.

(Id. at 1-2.) If Lagniappe adhered to these terms, Bevolo would "honor outstanding quotes for thirty (30) days from the date of this letter." (Id. at 2.) Furthermore, the letter stated that if Lagniappe executed and returned the termination letter in the space provided within five days of receipt, and complied with the letter's requirements, Bevolo would forego legal action; otherwise, Bevolo reserved the right to seek appropriate legal remedies. (Id.)

Jeff Ber, owner of Lagniappe, signed the termination letter on October 4, 2011. (Id.; March 18, 2013 Ber Aff. ¶ 3.) In addition to signing the letter, however, Ber added a note to the letter. He placed a star next to provision number four above, and added a handwritten sentence toward the end of the termination letter. (Termination Letter at 2; Doc. No. 56-1, April 3, 2013 Aff. of Jeff Ber ¶ 9.) The handwritten note, which began with a star, stated as follows: "We are working on revising our website to remove all references to Bevolo and hope to have this completed by 10-16-2011 or sooner if possible." (Termination Letter at 2.)

Before Ber signed the termination letter, he also communicated with Mark Johnson, Chief Financial Officer of Bevolo. (Doc. No. 52-2, October 3, 2011 Email from Johnson to Ber; Doc. No. 34-3, Johnson Decl. ¶ 2.) Johnson laid out "guidelines to Bevolo no longer doing business with Lagniappe." (October 3, 2011 Email from Johnson to Ber.) These guidelines discussed only existing orders, how long Bevolo would honor prior quotes, payment protocols, and return of excess inventory. (See id.)

In November of 2011, Ber received an email from Bevolo's attorney, demanding that Lagniappe cease using all Bevolo trademarks, including its www.frenchquarterlanterns.com domain. (Doc. No. 52-3, November 1, 2011 email from Ted M. Anthony to Ber.) Lagniappe subsequently sued, seeking a declaration of non-infringement, and an order invalidating Bevolo's trademark in the term "French Quarter" in connection with lighting fixtures. (Compl. ¶¶ 20-21.) In response, Bevolo countersued, bringing a number of counterclaims, including breach of contract. (Am. Answer ¶¶ 36-59.) Bevolo now moves for partial summary judgment as to liability only on its breach of contract claim against Lagniappe. (See generally Mot.)

II. LEGAL STANDARD

To grant summary judgment, a court must find that the pleadings and evidence show that no genuine issue of material fact exists, and that the movant is therefore entitled to judgment as a matter of law. Fed. R. Civ. P. 56. The party moving for summary judgment must demonstrate the absence of any genuine issue of material fact; however, the party need not negate the elements of the nonmovant's case. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). "If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response." Id. If the moving party meets this burden, the nonmoving party must then go beyond the pleadings to find specific facts showing there is a genuine issue for trial. Id. "A fact is 'material' if its resolution in favor of one party might affect the outcome of the lawsuit under governing law." Sossamon v. Lone Star State of Tex., 560 F.3d 316, 326 (5th Cir. 2009) (citation omitted) (internal quotation marks omitted).

"Facts and inferences reasonably drawn from those facts should be taken in the light most favorable to the non-moving party." Nichols v. Enterasys Networks, Inc., 495 F.3d 185, 188 (5th Cir. 2007). Courts may not make credibility determinations or weigh the evidence. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). Hearsay, conclusory allegations,unsubstantiated assertions, and unsupported speculation are not competent summary judgment evidence. Fed. R. Civ. P. 56(e)(1); see, e.g., McIntosh v. Partridge, 540 F.3d 315, 322 (5th Cir. 2008); Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir.1996) see also Liquid Air Corp., 37 F.3d at 1075 (noting that a nonmovant's burden is "not satisfied with 'some metaphysical doubt as to the material facts'") (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). However, "summary judgment is appropriate in any case where critical evidence is so weak or tenuous on an essential fact that it could not support a judgment in favor of the nonmovant." Liquid Air Corp., 37 F.3d at 1076 (citation omitted) (internal quotation marks omitted). A court should not, in the absence of proof, assume that the nonmoving party could or would provide the necessary facts. Id. at 1075.

III. ANALYSIS

To prevail on a breach of contract claim under Texas law, a plaintiff must show: "(1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach." Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009); Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex. App.—Houston [14th Dist.] 2005, pet. denied). Bevolo argues that each element above is met, and it moves for summary judgment as to liability only on its breach of contract claim. (Mot. at 6-8.) It argues that the signed termination letter was a valid contract between Bevolo and Lagniappe, whereby Lagniappe agreed to cease using all Bevolo trademarks in exchange for Bevolo forgoing legal action. (Id. at 7.) It contends that Lagniappe breached this contract by continuing, to this day, to operate the French Quarter websites, which use Bevolo's French Quarter trademark. (Id.)

Lagniappe disputes the existence of a valid contract, arguing there was no meeting of the minds that Lagniappe was required to stop using its French Quarter websites. (Doc. No. 52, Resp. at 6-7.) It argues that, because neither the termination letter nor the October 3, 2011 email ever specifically stated that Lagniappe was to stop using its French Quarter websites, there was no meeting of the minds as to this point. (Id. at 6-7.) Alternatively, Lagniappe argues that, at the very least, the termination letter's silence on the meaning of the term "Bevolo marks" renders the contract ambiguous, and a fact issue exists as to whether Lagniappe's continued use of the French Quarter websites constitutes a breach of the contract. (Id. at 13-14.) Lagniappe also argues, in the alternative, that by failing to mention that Lagniappe was to stop using its French Quarter websites, Bevolo fraudulently induced Ber to forfeit Lagniappe's rights in the French Quarter websites, and, accordingly, Lagniappe is not bound by the contract. (Id. at 8-11.) Finally, Lagniappe argues that it is entitled to equitable relief on the grounds of a unilateral mistake. (Id....