Maya Swimwear Corp. et al v. Maya Swimwear LLC et al
Filing
49
MEMORANDUM OPINION. Signed by Judge Sue L. Robinson on 4/5/2012. (fms)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
MAYA SWIMWEAR CORP., and
CAROLINA DINARDI,
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)
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Plaintiffs,
v.
MAYA SWIMWEAR, LLC, DAVID
MCKINNEY, and TODD FORD,
Defendants.
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)
)
)
)
Civ. No. 11-59-SLR
)
)
)
Neil Lapinski, Esquire of Elliot Greenleaf, Wilmington, Delaware. Counsel for Plaintiff.
Of Counsel: Daniel G. P. Marchese, Esquire of The Marchese Law Firm, LLC.
David E. Wilks, Esquire, of Wilks, Lukoff & Bracegirdle, LLC, Wilmington, Delaware.
Counsel for Defendant.
MEMORANDUM OPINION
Dated: April 5, 2012
Wilmington, Delaware
I. INTRODUCTION
Carolina Dinardi ("Dinardi") and Maya Swimwear Corp. ("Maya Agentina")
(collectively "plaintiffs") design, manufacture, and distribute an exclusive line of bikinis
under the "Maya" brand name. (D.I. 14 at mf8-13) David McKinney ("MicKinney"),
Todd Ford ("Ford"), and Maya Swimwear LLC ("Maya USA") (collectively "defendants")
originally sold Maya brand bikinis in the United States according to a 2003 Letter of
Intent ("LOI") signed by the parties. (Jd. 1f17) On January 15, 2011, after business
discord came to a boil, plaintiffs filed suit against defendants. (D.I. 1) Plaintiffs
amended their complaint on January 20, 2011 and again on February 3, 2011. (0.1. 7;
14) The second amended complaint: 1) seeks declaratory judgment that the business
relationship between Maya USA and Maya Argentina has been severed (count I) (D.I.
14 at mf33-36); 2) alleges violation of sections 1114(b) and 1125(a) of the Lanham Act,
15 U.S.C. ยง 1051 et. seq. for trademark violations (counts II & Ill) (/d. at mf37-40); and
3) claims that defendants tortiously interfered with a contractual relationship by
harassing Christina Pinto ("Pinto"), a former employee of defendants who now works for
plaintiffs (count IV). (/d. at mf 41-52)
After a ruling on plaintiffs' motion for a preliminary injunction and defendants'
motion to dismiss (D. I. 30), the parties engaged in settlement discussions. (D.I. 34; 37)
Currently before the court is plaintiffs' motion to enforce their settlement agreement with
defendants. 1 (D. I. 33) For the following reasons, the court grants plaintiffs' motion.
1
Defendants McKinnley and Maya USA agreed to settle with plaintiffs after the
filing of this motion. Accordingly, the motion to enforce is only pending aganist
defendant Ford. (D.I. 46)
II. BACKGROUND
A. The Parties and The Contested Use of the Mark
Dinardi is the owner of Maya Argentina, a Florida corporation with its principal
place of business in Buenos Ares, Argentina. (D. I. 14 ,-r,-r 2-3) McKinney and Ford are
both owners of Maya USA, a Delaware corporation with its principal place of business
in Florida. (ld. at W 4-6)
Dinardi began selling Maya bikinis in the United States in 2002. (ld. at ,-r 10)
She had initially used Joe Market USA LLC to import Maya bikinis into the United
States from Argentina. (ld. at ,-r 14) In September 2003, Ford and McKinney traveled
to Argentina to present a business proposal to Dinardi. (ld. at ,-r 17) Dinardi, Ford, and
McKinney thereafter reached an agreement and signed the LOI which gave Maya USA
exclusive sale and distribution rights for Maya bikinis in the United States. (ld.)
Defendants set up a website, www.buymaya.com, to help with the marketing, promotion
and sale of the bikinis.
On April 20, 2004, Dinardi filed for registration of the Maya trademark on the
principal register of the United States Patent and Trademark Office. The registration
issued on October 9, 2007 with registration number 3306450. (/d. at ,-r 19)
Defendants failed to meet the sales goals set fourth in the LOI which meant the
LOI expired in 2005; nevertheless, Dinardi continued the business relationship with
defendants in order to sell and market Maya bikinis in the United States. (ld. at ,-r 2022) Sales continued to decline, yet the relationship continued through 2010 when,
according to plaintiffs, Ford and McKinney failed to book a booth at the Miami Trade
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Show. {ld. at 1Mf 28-30) In the wake of this failure, on October 13, 2010, Dinardi sent
Maya USA a letter memo officially severing ties to defendants and ending any and all
business relations with them. {ld.
at~
32) Despite this letter, defendants continued to
sell Maya bikinis via their www.buymaya.com website. (/d.
at~
33) The current
litigation resulted from plaintiffs' failed attempt to effectively sever relations with
defendants.
B. The Court's June 8, 2011 Ruling
In a June 8, 2011 memorandum opinion and order, the court granted in part and
denied in part both plaintiffs' motion for a preliminary injunction and defendants' motion
to dismiss. Specifically, the court held:
1. Plaintiffs' motion for a preliminary injunction (D.I. 8) is granted-in-part and
denied-in-part, to wit:
a. Defendants may continue to sell Maya brand bikinis, but they
cannot claim or imply that they are the current line unless they
actually are.
b. Defendants are to refrain from using the URL www.buymaya.com.
c. Defendants are to refrain from using the Maya trademark at the top
of their website.
d. Defendants are to use a different business name for their website
that does not involve the "Maya" trademark.
e. Defendants may use the Maya trademark on their website to
advertise the sale of Maya brand bikinis, but they must use the mark
either as plain text or in whole with a clear disclaimer that they are not
an authorized retailer.
2. Defendants' motion to dismiss for failure to state a claim (D.I. 16) is
granted-in-part and denied-in-part, to wit:
a. Defendants' motion to dismiss counts one, two, and three is
denied.
b. Defendants' motion to dismiss count four is granted.
(D.I. 31)
C. Settlement Discussions
3
Following the court's ruling, the parties attempted to broker a settlement
agreement. According to the plaintiffs, the parties agreed on a settlement following a
June 20, 2011 telephone conversation. (D. I. 34 at 3-6) Plaintiffs point to a series of
emails sent between counsel following the June 20th discussion in support of their
position that an agreement on all essential terms was reached. (/d.) Specifically, in
that June 20, 2011 email to defense counsel, plaintiffs' counsel stated the following:
Gentlemen:
My clients have given the "green light" to the settlement discussed earlier this
afternoon. Kindly allow the letter to confirm this matter has resolved as
follows:
1. The Order of the U.S. District Court for the District of Delaware of June
8, 2011, shall remain in place and in full force and effect and essentially can
be deemed and or considered a final order.
2. Per the Order, the status quo shall be maintained.
3.
The parties shall exchange mutual releases and mutual nondisparagment agreements.
Thank you for reaching out. Neil and I will set out to tackle the Releases and
Non-Disparagement Agreements and will work out the other fine points in the
next five (5) business days.
(D. I. 34 at Ex. A) In a subsequent email from defense counsel to plaintiffs' counsel,
dated June 30, 2011, the parties were arguing about whether defendants' website
complied with the court's June 8, 2011 order. In that email, defense counsel stated:
[T]he site is wholly compliant with the order and we resist our competitor's
effort to select our client's marketing methods. I find it difficult to understand
how this issue could be "an issue with finalizing" the settlement, since we
have not yet received the draft settlement agreement that was promised
some time ago. If your client does, in fact, desire to resolve this case as she
has already agreed, please circulate a proposal at your first opportunity. If
she intends to renege on her agreement, we will take the action we feel most
appropriate.
4
(ld. at Ex. B) Just after this exchange, plaintiffs' counsel forwarded a proposed
settlement agreement to defense counsel. (D. I. 37 at Ex. B) Defendants responded a
few days later with a red lined version of the proposed settlement. (ld. at Ex. C) In
response, plaintiffs' counsel provided defense counsel with what they deemed a
stripped down version of the agreement that only contained the essential terms. (ld. at
Ex. D) In that August 3, 2011 email, plaintiffs' counsel stated the following:
[Defense counsel], In response to your revised version, we have attached
a memorialization of our agreement. It contains only the essential terms
agreed to on our telephone conversation of June 20, 2011 as confirmed in
[plaintiffs' counsel] email of the same date. Since that date you have
repeatedly reminded us that we have an agreement and admonished us
that our client will suffer consequences should she renege. We agree.
Please provide an executed copy by close of business today or we will file
a motion to enforce the settlement agreement with the Court.
Thank you[.]
(ld.) Negotiations broke down shortly thereafter when the parties could not agree on a
final written settlement agreement.
Ill. STANDARD OF REVIEW
"An agreement to settle a lawsuit, voluntarily entered into, is binding upon the
parties, whether or not made in the presence of the court, and even in the absence of a
writing." Rohm and Haas Elec. Materials, LLC v. Honeywell Intern., Inc., 2009 WL
1033651, at *4 (D. Del. 2009) (quotations and citation omitted). A district court has
jurisdiction to enforce a settlement agreement entered into by litigants in a case
pending before it. See Hobbs & Co. v. Am. Investors Mgmt., Inc., 576 F .2d 29, 33 &
n. 7 (3d Cir. 1978). Because motions for the enforcement of settlement agreements
resemble motions for summary judgment, the court must employ a similar standard of
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review. See Tiernan v. Devoe, 923 F.2d 1024, 1031-32 (3d Cir. 1991). Accordingly,
the court must treat all the non-movant's assertions as true, and "when these assertions
conflict with those of the movant, the former must receive the benefit of the doubt." /d.
at 1032 (internal quotation and citation omitted). Summary judgment is appropriate
only if "there is no genuine issue as to any material fact and ... the moving party is
entitled to judgment as a matter of law." Fed. R. Civ. P. 56( c). Courts should not
summarily enforce purported settlement agreements, in the absence of an evidentiary
hearing, where material facts concerning the existence or terms of an agreement to
settle are in dispute. See id. at 1031 (quoting Garabedian v. Allstates Eng'g Co., 811
F.2d 802, 803 (3d Cir.1987)).
IV. DISCUSSION
A. Delaware Contract Law Requirements
"State law governs the construction and enforcement of settlement agreements
in federal court." Excelsior Ins. Co. v. Pennsbury Pain Ctr., 975 F. Supp. 342, 349
(D.N.J. 1996); see also Parker-Hannifin Corp. v. Schlegel Elec. Materials, Inc., 589 F.
Supp. 2d 457, 461 (D. Del. 2008) (citing Wilcher v. City of Wilmington, 139 F.3d 366,
372 (3d Cir. 1998)). Accordingly, "the court must determine whether the settlement
agreement at issue is enforceable under Delaware law." 2 Leonard v. University of
Delaware, 204 F. Supp. 2d 784, 787 (D. Del. 2002).
"Under Delaware law[,] a contract comes into existence if a reasonable person
would conclude, based on the objective manifestations of assent and the surrounding
2
The parties agree that Delaware law is controlling. (D. I. 34 at 6; D. I. 37 at 4-5)
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circumstances, that the parties intended to be bound by their agreement on all essential
terms." Rohm and Haas, 2009 WL 1033651, at *5 (quotations and citations omitted);
see also Schwartz v. Chase, 2010 WL 2601608, at *4 (Del. Ch. 2010) (quoting Leeds v.
First Allied Conn. Corp., 521 A.2d 1095, 1097 (Del. Ch. 1986)) ("When dealing with a
motion to enforce a settlement agreement, the Court generally determines whether a
binding settlement agreement arose by asking 'whether a reasonable negotiator in the
position of one asserting the existence of a contract would have concluded, in that
setting, that the agreement reached constituted agreement on all of the terms that the
parties themselves regarded as essential and thus that that agreement concluded the
negotiations and formed a contract."') A contract contains all essential terms and is
therefore enforceable when "it establishes the heart of the agreement;" it need not,
however, contain all terms as some matters may be left for future negotiation. ParkerHannifin, 589 F. Supp. 2d at 463. In other words, "[u]ntil it is reasonable to conclude, in
light of all of these surrounding circumstances, that all of the points that the parties
themselves regard as essential have been expressly or ... implicitly resolved, the
parties have not finished their negotiations and have not formed a contract." Leeds,
521 A.2d at 1102. In short, "an enforceable contract exists where a reasonable person
would conclude that the parties had reached a definite and final agreement on all
essential terms." Rohm and Haas, 2009 WL 1033651, at *5.
B. Analysis
Plaintiffs contend that defendants made an offer to settle during the June 20th
call, and plaintiffs' June 20th email response was an acceptance of that offer. (D.I. 34
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at 1; 3-5) In support of this contention, plaintiffs point the court to the June 20th, June
30th and August 3rd emails detailed above. (D.I. 34 at 3-5) The court agrees with
plaintiffs' contention. The language of the June 20th email clearly suggests that
defendants made an offer to settle and it was subsequently accepted by plaintiffs.
Specifically, the emails states: "My clients have given the "green light" to the
settlement discussed earlier this afternoon. Kindly allow this letter to confirm this
matter has resolved." 3 Defendants' June 30th email confirms that the settlement offer
was made and accepted. By claiming that they will be forced to take action if plaintiffs
renege on their agreement, defendants acknowledged that a settlement had been
reached. Furthermore, the fact that defendants never denied plaintiffs' insistence that a
settlement had been reached - this insistence being evidenced in the June 20th and
August 3rd emails- indicates that all sides agreed that settlement had been achieved.
Accordingly, based upon these email exchanges, the court concludes that the parties
objectively intended and assented to be bound by the terms set forth in the June 20th
email.
Defendants, in reliance on the same set of email exchanges, contend that an
agreement was not been reached. (D. I. 37 at 4) Defendants' brief appears to set forth
3
It is worth noting that defendants open the facts section of their brief by
acknowledging that they "initiated [the June 20th] telephone conference ... and
proposed that the parties ... agree to conform their conduct to the June 8 Order,
plaintiffs would dismiss this case, defendants would forgo their unasserted
counterclaims and the parties would enter a settlement agreement and release
containing mutually acceptable terms." (D. I. 37 at 2) While defendants later
recharacterize their position as having "proposed a broad framework under which the
parties might separate," (/d. at 5) the court finds this initial explanation noteworthy.
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three arguments as to why a settlement agreement was not achieved or enforceable. 4
First, defendants argue that the parties explicitly agreed that a signed settlement
agreement was required before any agreement would be considered enforceable. (ld.
at 2; 6; 8) Second, defendants contend that the June 20th "agreement" could not be
enforceable because it did not contain all essential terms. (ld. at 2-3; 5-6) Lastly,
defendants assert that the June 3oth settlement proposal sent by plaintiffs was a
counteroffer. (/d. at 3; 6; 8) The court does not find defendants' arguments persuasive
for the reasons discussed below:
1. Written agreement
Defendants assert on several occasions that the parties specifically agreed that
a signed document was necessary in order to bind the parties. (e.g. id. at 2 ("[Lawyers
on both sides of the case acknowledged that a definitive document stating the terms of
the agreement would be required")) The law in Delaware on this issue is clear:
There is no enforceable contract if the parties do not intend to be bound
before a formal written agreement is drafted and signed. The fact that the
parties intend to execute a formal agreement, however, is not dispositive.
The question is whether the parties positively agree that there will be no
binding contract until the formal document is executed.
Anchor Motor Freight v. Ciabattoni, 716 A.2d 154, 156 (Del. Supr. 1998). In the
absence of such an agreement, a contract's terms can take effect prior to the contract's
memorialization and execution. /d.
While defendants at bar assert that memorialization and execution was a
prerequisite to enforcement, they point the court to no evidence suggestive of this.
4
Defendants have not offered three separate arguments in support of their
position, but when the court reads through their brief, three distinct arguments emerge.
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While the emails provided indicate that a written settlement agreement was
contemplated, the emails do not suggest that enforcement was in any way contingent
upon memorialization; in other words, the emails do not evidence any "positive
agreement." Without some evidence suggesting this, there is so genuine issue of fact
to resolve.
2. Essential terms
Defendants argue that all essential terms were not resolved as of the June 20th
"acceptance." Defendants point to the language in the June 20th email- specifically,
the reference to "other fine points" - and argue that that language clearly indicates that
negotiations would continue. 5 Defendants go on to assert that "the incomplete status of
the parties' negotiations is plainly illustrated in plaintiffs' draft settlement agreement ...
which introduced a variety of terms that had never been proposed, accepted or even
mentioned on June 20." (D. I. 37 at 6) Specifically, a review of defendants' brief and
their redlined version of plaintiffs' proposed settlement suggest that defendants were
most concerned with: 1) the inclusion of, as opposed to reference to, the court's June
8, 2011 order in the recitals portion of the agreement; 2) the inclusion of a Delawarebased enforcement provision; 3) the inclusion of a provision assessing attorney fees
against a party that breaches the agreement, and 4) the inclusion of an assignment
provision. (/d. at 3; 7; Exs. C & F)
Initially, the court notes that the inclusion of the phrase "other fine points" does
5
At page 6 of their brief, defendants note that "[plaintiffs' counsel]
acknowledged that additional terms still required negotiation, i.e. "other fine points."'
(D.I. 37 at 6) On page 7, defendants say: "Using [plaintiffs' counsel's] terminology,
there were fine points to discuss indeed." (/d. at 7)
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not suggest, in the context of the parties' exchanges, that essential terms still needed to
be resolved. To the contrary, as discussed above, the parties' exchanges evidence
their clear intent to be bound by the terms set forth in plaintiffs' June 20, 2011 email.
The court also notes that a written settlement document will necessarily contain
additional, boilerplate and conventional settlement language, not specifically addressed
by the parties. Loppert v. Windsortech, Inc., 865 A.2d 1282,1289 (Del. Ch. 2004). The
inclusion of such language does not mean that essential terms remained outstanding or
a counteroffer was made. /d. A settlement agreement will be enforceable so long as it
contains all essential terms, i.e., it contains the heart of the agreement. See supra,
pgs. 6-7.
Defendants' suggestion that plaintiffs' draft agreement evidences the continuing
nature of the parties' negotiations is unpersuasive. The objective evidence indicates
that all essential terms were addressed. The inclusion of, as opposed to reference to,
the June 8, 2011 order is immaterial as the order speaks for itself no matter if it is
explicitly included or not. Inclusion of language that maintains jurisdiction in Delaware, 6
assess attorney fees for breach and permits assignment of the agreement are routine
and boilerplate additions that one would expect to find in a written settlement document.
In short, a reasonable person would not conclude, based upon the "other fine
points" language and the state of the settlement proposal, that essential terms were
6
Courts have jurisdiction to enforce settlement agreements in actions pending
before them. See supra, Hobbs & Co., pg. 5; see a/so Fox v. Consolidated Rail Corp.,
739 F.2d 929, 932 (3d Cir. 1984) ("It is well settled that a federal court has the inherent
power to enforce and to consider challenges to settlements entered into in cases
originally filed therein."). Therefore, this issue is implicitly resolved by reference to wellsettled case law.
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outstanding. Instead, on the whole, a reasonable person would conclude that all
essential terms had been either explicitly or implicitly resolved through negotiations as
of June 20, 2011.
3. Counteroffer
As discussed, the plaintiffs' draft settlement agreement was not a counteroffer
simply because it contained non-essential (i.e., standard settlement agreement) terms.
The court finds that a reasonable person would believe that an offer was made and
accepted on June 20th and all parties believed that a settlement had been reached on
essential terms as of that date. The June 30th settlement draft was an attempt to
memorialize the agreement in accordance with the terms set forth by the parties on
June 20th.
V. CONCLUSION
For the reasons set forth above, the court grants plaintiffs' motion to enforce their
settlement agreement with defendants, consistent with the essential terms of the
agreement set forth in plaintiffs' June 20, 2011 email. (D. I. 33) An appropriate order
shall issue.
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