Coffee Mania, LLC v. Coffeemania Bryant Park, LLC

Filing 51

MEMORANDUM-DECISION AND ORDER: The Court hereby ORDERS that Plaintiff's # 45 motion to reopen this action is GRANTED. The Court further ORDERS that Defendant's # 46 cross-motion to enforce the parties' settlement agreement is DENIED because no such agreement exists. The Court further ORDERS that, if Plaintiff wishes to file a motion for leave to amend its amended complaint, Plaintiff shall do so within 20 days of the date of this Memorandum-Decision and Order. The Court furthe r ORDERS that Defendant shall file its opposition to any such motion within 14 days of the date on which Plaintiff files its motion. The Court further ORDERS that Plaintiff shall file its reply, if any, in further support of any such motion within 8 days of the date on which Defendant files its opposition to said motion. The Court further ORDERS that this matter is referred to Magistrate Judge Peebles for all further pretrial matters. Signed by Senior Judge Frederick J. Scullin, Jr. on 8/8/2017. (nmk)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
_______________________________________________
COFFEE MANIA, LLC,
Plaintiff,
v.

5:15-CV-823
(FJS/DEP)

COFFEEMANIA BRYANT PARK, LLC,
Defendant.
_______________________________________________
APPEARANCES

OF COUNSEL

OFFICE OF ROBERT E. PURCELL
211 West Jefferson Street, Suite 24
Syracuse, New York 13201
Attorney for Plaintiff

ROBERT E. PURCELL, ESQ.

DAVIS & GILBERT LLP
1740 Broadway
New York, New York 10019
Attorneys for Defendant

JAMES R. LEVINE, ESQ.

BODMAN PLC
201 South Division Street, Suite 400
Ann Arbor, Michigan 48104
Attorneys for Defendant

JUSTIN P. BAGDADY, ESQ

SCULLIN, Senior Judge
MEMORANDUM-DECISION AND ORDER
I. INTRODUCTION
Pending before the Court are Plaintiff's motion to reopen this case, see Dkt. No. 45, and
Defendant's cross-motion to enforce the settlement agreement, see Dkt. No. 46.

II. BACKGROUND
Plaintiff Coffee Mania is a New York limited liability company with its principal place of
business in New York. See Dkt. No. 46-1 at 4. Plaintiff currently operates two drive-in coffee
shops, in Cortland and Homer, New York, and does not own a U.S. trademark for its name. See id.
Defendant Coffeemania Bryant Park is a New York limited liability company that is in the process
of opening a restaurant in Manhattan. See id.
In July 2014, Plaintiff sent Defendant a "cease and desist" letter. See id. at 4-5. In that
letter, Plaintiff stated that Defendant's intent to open a restaurant under a name so similar to
Plaintiff's coffee shops would "violate Plaintiff's common law trademark rights." See id. at 5. In the
year following Defendant's receipt of the letter, the parties engaged in discussions about how to
proceed. See id.
On May 13, 2015, after a year of unsuccessful discussions, Plaintiff filed a complaint in New
York Supreme Court, County of Cortland. See Dkt. No. 45 at 2 n.1. In that complaint, Plaintiff
asserted, among other things, a federal cause of action under the Lanham Act, 15 U.S.C. § 1125(a).
See id. On the basis of that federal cause of action, Defendant removed the case from state court to
this District on July 14, 2015. See id.
Following removal, Plaintiff filed an amended complaint, in which it deleted the federal
cause of action, see Dkt. No. 7, Dkt. No. 10-1 at 3, and, thereafter, filed a motion to remand the case
to state court, see Dkt. No. 10. Simultaneously, Defendant filed a motion to dismiss for improper
venue or, in the alternative, to transfer venue to the Southern District of New York. See Dkt. No. 9.
In a Memorandum-Decision and Order dated March 21, 2016, this Court denied Defendant's
motion to transfer venue and also denied, without prejudice and with leave to renew, Plaintiff's
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motion to remand. See Dkt. No. 26 at 9. Furthermore, the Court directed the parties to "engage in
discovery limited to . . . the citizenship of the parties and the amount in controversy" within thirty
days of the date of the Memorandum-Decision and Order. See id.
Following these events, the parties agreed to select Phil Frankel, a partner at Bond,
Schoeneck & King PLLC, as a mediator and agreed to participate in a mandatory mediation session
at his office. See id. The first mediation session occurred on April 15, 2016, and lasted
approximately six hours. See Dkt. No. 35 at 1. At its conclusion, Mr. Frankel reported to the Court
that the parties were "close to settlement" but needed to schedule another mediation session. See id.
On June 7, 2016, the parties met for their second mediation session with Mr. Frankel, which
lasted approximately eight hours. See Dkt. No. 46-1 at 6. At the second session, Defendant and its
representatives were only available by telephone. See id. However, "the parties, counsel for the
parties, and the mediator agreed" that Defendant did not need to travel from Michigan to New York
again. See id. Following the second session, Mr. Frankel reported to the Court that the case had
settled and that the "Settlement Agreement and Stipulation for Dismissal [were] being prepared and
[would] be submitted for the court's consideration." See Dkt. No. 37.
On July 7, 2016, the parties participated in a telephone conference with Magistrate Judge
Peebles, and Mr. Frankel "filed a report . . . indicating that [the] matter had settled." See Text
Minute Entry dated July 9, 2016. On July 8, 2016, this Court entered an Order of Dismissal by
Reason of Settlement. See Dkt. No. 38. In that Order, this Court stated that "the parties have settled
. . . or are in the process of doing so." See id. (citing Dkt. No. 37). The Court also stated that,
pursuant to N.D.N.Y. L.R. 68.2(a), an application to reopen the case would be permitted if it were
filed within 60 days of the date of the Order or within any extended time frame that the Court
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granted prior to the expiration of the original 60-day time frame. See id. at 1-2.
Magistrate Judge Peebles held a second telephone conference with counsel on September 9,
2016, and scheduled a follow-up telephone conference for October 13, 2016. See Text Minute
Entry dated September 9, 2016.
On October 13, 2016, during their follow-up telephone conference with Magistrate Judge
Peebles, the parties informed him that they were "at an impasse with their settlement negotiations."
See Text Minute Entry dated October 14, 2016. Consequently, Magistrate Judge Peebles granted
Plaintiff an extension until October 21, 2016, to file a letter requesting that the Court reopen the
case. See id.
On October 14, 2016, Plaintiff filed a motion, requesting that the Court reopen the case and
issue a new scheduling order. See Dkt. No. 45. In its motion, Plaintiff stated that "settlement
negotiations [had] reached an impasse and further negotiations . . . would be fruitless." See id. at 1.
Plaintiff also asserted that it intended to "file a motion for leave to amend its Complaint" to re-assert
the federal Lanham Act claim that it had previously deleted from its original complaint, when it
filed its amended complaint. See id. Plaintiff further stated that an amendment re-asserting the sole
federal cause of action would "give this Court clear federal question subject matter jurisdiction[,]"
as well as "render moot any need for discovery or any ruling regarding the existence of diversity
subject matter jurisdiction." See id. at 2.
On November 11, 2016, Defendant filed its cross-motion to enforce the settlement
agreement. See Dkt. No. 46. In its motion, Defendant stated that, although Plaintiff's counsel had
previously told this Court that "the parties had agreed on all material terms and the matter had
settled," Plaintiff was now refusing to honor that agreement "unless Defendant capitulate[d] to a
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new set of demands that were not part of the agreement." See Dkt. No. 46-1 at 4. Defendant
requested that this Court deny Plaintiff's motion and "forever close" this case. See id.
Finally, on November 28, 2016, Plaintiff filed its opposition to Defendant's cross-motion.
See Dkt. No. 47. Plaintiff asserted that "there was no clear indication of the particular settlement
document Defendant [sought] to enforce." See id. at 5. Consequently, Plaintiff argued that this
Court should deny Defendant's cross-motion and grant its motion to reopen this case and allow it to
amend its complaint. See id.

III. DISCUSSION
A.

Plaintiff's motion to reopen this case
In its Order of Dismissal by Reason of Settlement, the Court ordered that "[a]ny application

to reopen this case must be filed within sixty (60) days of the date of this Order . . . unless this Court
has extended this period prior to its expiration[.]" See Dkt. No. 38 at 1-2. The parties requested an
additional thirty days for negotiations prior to the expiration of the 60-day period set forth in the
Court's Order of Dismissal, which the Court granted. See Text Minute Entry dated September 9,
2016. Thereafter, the Court continued a "stay of the deadline for reopening the case pending further
order of the court." See id. Finally, Magistrate Judge Peebles lifted the stay and instructed Plaintiff
to file its motion to reopen the case on or before October 21, 2016. See Dkt. No. 45. As noted,
Plaintiff complied with this Order by filing its motion on October 14, 2016. See id.
Accordingly, because Plaintiff sought to reopen the case within the required time frame, the
Court grants its motion.

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B.

Subject matter jurisdiction
As noted, after Defendant removed this action from state court to this District, Plaintiff filed

an amended complaint, in which it removed the only federal cause of action that it had asserted in
its original complaint. See Dkt. No. 7. Although the Court previously directed the parties to
conduct limited discovery regarding the issue of diversity jurisdiction, Plaintiff's filing of its
amended complaint did not divest this Court of jurisdiction over this matter even though the only
claims that remained in this action were state-law claims. See In Touch Concepts, Inc. v. Cellco
P'ship, 788 F.3d 98, 101 (2d Cir. 2015) (noting that, "for the purpose of analyzing statutory
subject-matter jurisdiction, the Supreme Court has treated amended complaints in removal cases
with flexibility. For example, 'when a defendant removes a case to federal court based on the
presence of a federal claim, an amendment eliminating the original basis for federal jurisdiction
generally does not defeat jurisdiction.'" (quoting [Rockwell Int'l Corp. v. United States, 549 U.S.
457,] 474 n.6, 127 S. Ct. 1397 [(2007)])); Bennett v. Beiersdorf, Inc., 889 F. Supp. 46, 48 (D. Conn.
1995) (stating that "[a] plaintiff whose case has been removed to federal court cannot defeat federal
jurisdiction by amending her complaint to excise the federal claims" (citing Boelens v. Redman
Homes, Inc., 759 F.2d 504, 507 (5th Cir. 1985) (citing, inter alia, Hazel Bishop Inc. v. Perfemme,
Inc., 314 F.2d 399, 403 (2d Cir.1963)))).
The Court concludes, therefore, that, because it had jurisdiction over this matter at the time
of removal, it continues to have jurisdiction over this matter, despite Plaintiff's post-removal filing
of an amended complaint.

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C.

Defendant's cross-motion to enforce the parties' settlement agreement
To support its cross-motion, Defendant argues that the Court should enforce the parties'

settlement agreement because the parties have agreed to all material terms – either orally or via
email – and that is sufficient to bind both parties to the agreement. Alternatively, Defendant asserts
that, even if the Court finds there is no binding settlement agreement, the parties nevertheless
reached a binding preliminary agreement. See Dkt. No 46-1 at 6, 14.
With regard to its first argument, Defendant asserts that the parties agreed on "all material
terms one would expect to see in the settlement of a trademark matter" in addition to multiple
"trivial matters"[.]" See id. at 7. Furthermore, Defendant argues that combining these terms into a
fully-executed document is not a prerequisite for enforcement. See id. at 9 (citing Winston v.
Mediafare Enter. Corp., 777 F.2d 78, 80 (2d Cir. 1993) ("Simply because the parties contemplate
memorializing their agreement in a formal document does not prevent their agreement from coming
into effect before written documents are drawn up . . . if the parties have settled on the contract's
substantial terms, a binding contract will have been created, even though they also intended to
memorialize it in writing[.]")). Instead, Defendant contends that, to enforce an agreement not yet
memorialized in writing, a court must look to the "words and deeds" of the parties that "constitute
objective signs in a given set of circumstances" to determine whether the parties formed a contract.
See Dkt. No. 46-1 1t 10 (quoting Winston, 777 F.2d at 80). A court performs this analysis by
looking at four factors, all of which, according to Defendant, are present in this case. See Dkt. No.
46-1 at 10; see also id. at 13 (citing Delyanis v. Dyna-Empire, Inc., 465 F. Supp. 2d 170 (E.D.N.Y.
2006)). Consequently, Defendant asserts that "Plaintiff's later protestations and new demands
should not influence the Court when Plaintiff orally agreed to the terms and also where its 'email
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settlement acceptance is sufficient to bind [it].'" See Dkt. No. 46-1 at 13.
Alternatively, Defendant argues that, at a minimum, the parties reached a binding
preliminary agreement. See id. at 14. Defendant asserts that, when there is an unsigned settlement
agreement, New York law recognizes two additional means of enforcement: (1) a Type I agreement
and (2) a Type II agreement. See id. Defendant contends that, in this case, the parties' agreement
meets the conditions of a Type I agreement because "the parties reached an oral agreement at
mediation and then confirmed that agreement via email" in June. See id. (citing Adjustrite Sys., Inc.
v. GAB Bus. Servs., Inc., 145 F.3d 543, 549 (2d Cir. 1998)). Defendant also insists that the parties'
agreement meets the conditions of a Type II agreement and that Plaintiff has breached the terms of
that agreement because it "has not negotiated . . . in good faith." See id. at 15 (citing Network Enter.
v. APBA Offshore Prod., 427 F. Supp. 2d 463, 485 (S.D.N.Y. 2006)).
In response, Plaintiff argues that there is no comprehensive settlement agreement for the
Court to enforce. See Dkt. No. 47 at 5. In this regard, Plaintiff contends that, although the parties
discussed and agreed on terms in April 2016, and again in June 2016, none of these terms were
consolidated into a signed, formal settlement agreement. See id. at 5, 10-13. Furthermore, Plaintiff
asserts that the "objective evidence strongly indicates that there was no complete, binding settlement
agreement as of the telephone status conference held July 7, 2016" as the Court's text minute entry
indicates that "Plaintiff's counsel recently sent the proposed draft settlement agreement to the
defendant." See id. at 6 (emphasis added). Consequently, Plaintiff asserts that the settlement
agreement that Defendant is asking the Court to enforce is "nebulous" at best and, therefore, cannot
be binding on either party. See id. at 5.
In addition, Plaintiff argues that Defendant's requested enforcement of a preliminary
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agreement is "foolish." See Dkt. No. 47 at 20 n.9. Plaintiff asserts that there is "no evidence of
record regarding any 'oral agreement at mediation'" and that, even if there were, this District's rules
prohibit it. See id. at 19-20 (citing N.D.N.Y. L.R. 83.11-5(d)(2)). Furthermore, both parties agreed
to a variety of terms on June 7, 2016; and, then, on June 20, 2016, Defendant added two clauses to
the agreement that were not part of the June 7, 2016 terms. See id. at 20. Consequently, Plaintiff
argues that Defendant has failed "to identify the specific 'Type II' preliminary agreement it seeks to
enforce" because there are two different June agreements. See id.
Finally, Plaintiff argues that, even if there were a complete, binding settlement agreement,
New York law would prohibit its enforcement. See Dkt. No. 47 at 22. Section 2104 of New York
Civil Practice Law and Rules provides that an agreement between parties or their attorneys "'relating
to any matter in an action, other than one made between counsel in open court, is not binding upon a
party unless it is in writing subscribed by him or his attorney or reduced to the form of an order and
entered.'" See id. at 23 (quoting N.Y. C.P.L.R. 2104). Plaintiff argues that Defendant has not
satisfied any of these conditions. See id. Finally, Plaintiff asserts that, pursuant to New York's
statute of frauds, "any alleged agreement is rendered void" due to the statute's requirements that the
agreement be performed within one year and that there must be a subscription to the agreement. See
id. at 23-24 (citing N.Y. Gen. Oblig. Law 5-701(a)).
"Settlement agreements are contracts and must therefore be construed according to general
principles of contract law." Red Ball Interior Demolition Corp. v. Palmadessa, 173 F.3d 481, 484
(2d Cir. 1999) (citations omitted). To establish the existence of such an agreement, "'there must be
an "offer, acceptance, consideration, mutual assent, and intent to be bound.'" Leibowitz v. Cornell
Univ., 584 F.3d 487, 507 (2d Cir. 2009) (quotation omitted). In addition, there must be a "meeting
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of the minds" on all essential terms of the agreement. See AIG Mex. Seguros Interamericana, S.A.
de C.V. v. M/V Zapoteca, 508 F. App'x 58, 59 (2d Cir. 2013) (summary order) (citing Interocean
Shipping Co. v. Nat'l Shipping & Trading Corp., 462 F.2d 673, 676 (2d Cir. 1972) (requiring "a
meeting of the minds" only "on the essential terms" of a contract)) (other citation omitted).
In addition, in determining what constitutes a binding agreement, courts are not confined to
the express writings. See Winston v. Mediafare Entm't Corp., 777 F.2d 78, 80 (2d Cir. 1985).
Parties are "free to enter into a binding contract without memorializing their agreement in a fully
executed document." Id. Furthermore, the parties' intent to commit their agreement to a writing
does not prevent a binding contract from forming prior to the execution of the writing. See id.
(citing R.G. Group, Inc. v. Horn & Hardart Co., 751 F.2d 69, 74 (2d Cir. 1984)) (other citations
omitted).
In this case, the parties refer to three groups of settlement terms: (1) terms from the
mediation session held on April 15, 2016 ("April Terms"); terms from the mediation session held on
June 6, 2016 ("June Terms"); and (3) terms that Defendant added to the June Terms on June 20,
2016 ("Email comments"). See Dkt. No. 46-1 at 6-7; Dkt. No. 47 at 5-6. Based on the arguments
that Defendant asserts in support of its cross-motion, it appears that the agreement that Defendant
seeks to enforce is the one that combines the April Terms and the June Terms. See Dkt. No. 46-1 at
12-13.
To determine whether there was a "meeting of the minds" on all of the terms, a court must
find that there was "'literally nothing left to negotiate'." Winston, 777 F.2d at 82 (quoting R.G.
Group, 751 F.2d at 76). That includes even the most minor changes. See id. This is because "[i]t is
not for the court to determine retrospectively that at some point in the evolution of a formal
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document that the changes being discussed became so 'minor' or 'technical' that the contract was
binding despite the parties' unwillingness to have it executed and delivered." Id. at 83; see also
H&R Block Tax Servs., LLC v. Strauss, No. 1:15-CV-0085, 2016 WL 5107114, *4 (N.D.N.Y. Sept.
20, 2016) (stating that "[t]he Second Circuit has given great weight to the terms of a draft settlement
agreement in determining whether the drafting party intended to be bound absent a signed writing")
(citing Ciaramella [v. Reader's Digest Ass'n, Inc.,] 131 F.3d [320,] 324 [(2d Cir. 1997)] ("We must
give . . . statements [in proposed settlement agreements] considerable weight, as courts should avoid
frustrating the clearly-expressed intentions of the parties.")).
In Winston, the parties exchanged multiple drafts with each other, at times recommending
simple language changes. See Winston, 777 F.2d at 83. Under these circumstances, the court held
that the parties' continual redrafting indicated that the "changes made must [have been] deemed
important enough to the parties to have delayed final execution and consummation of the
agreement." Id. at 82-83. Furthermore, the court noted that the parties' wish to "create a writing that
[was] satisfactory to both sides in every respect" was their choice and was evidenced in their wish to
continually redraft the terms of their proposed agreement. Id. Consequently, the court determined
that, if it were to hold that the parties' agreement was binding, it would have "deprive[d] the parties
of their right to enter into only the exact contract they desired." Id. at 83 (emphasis added).
Similarly, in Strauss, the parties communicated via email and telephone about the terms of a
settlement, and both parties had accepted the draft and agreed to move forward with finalizing the
document for a signature. The parties submitted this full, formal written settlement agreement,
absent the defendant's signature, to the court. The court held, however, that "because the Draft
Settlement Agreement" that the plaintiff had prepared "indicate[d] that Plaintiff did not consider
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itself bound by any agreement reached prior to the execution of the formal settlement documents,
the first Winston factor weigh[ed] heavily against enforcement"; and, ultimately, the court found
that there was no binding settlement agreement for it to enforce. See Strauss, 2016 WL 5107114, at
*5.
In this case, despite Defendant's contention that "[t]he parties agreed to a specific list of
terms in June and expressed to the Court that this case had settled[,]" see Dkt. No. 50 at 6, the
specific list of terms to which Defendant refers does not satisfy the requirement that the court set
forth in Winston that there should be nothing left to negotiate. The parties continued to make
changes to the terms after the June 6, 2016 mediation session as the email comments and additional
emails that the parties exchanged make clear. See Dkt. No. 47 at 5 n.1, 10-13.
Applying the applicable legal principles to the facts of this case leads the Court to the
inescapable conclusion that there is no binding settlement agreement for the Court to enforce.
Accordingly, the Court denies Defendant's cross-motion.

IV. CONCLUSION
Having reviewed the entire file in this matter, the parties' submissions, and the applicable
law, and for the above-stated reasons, the Court hereby
ORDERS that Plaintiff's motion to reopen this action, see Dkt. No. 45, is GRANTED; and
the Court further
ORDERS that Defendant's cross-motion to enforce the parties' settlement agreement, see
Dkt. No. 46, is DENIED because no such agreement exists; and the Court further
ORDERS that, if Plaintiff wishes to file a motion for leave to amend its amended complaint,
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Plaintiff shall do so within twenty (20) days of the date of this Memorandum-Decision and Order;
and the Court further
ORDERS that Defendant shall file its opposition to any such motion within fourteen (14)
days of the date on which Plaintiff files its motion; and the Court further
ORDERS that Plaintiff shall file its reply, if any, in further support of any such motion
within eight (8) days of the date on which Defendant files its opposition to said motion; and the
Court further
ORDERS that this matter is referred to Magistrate Judge Peebles for all further pretrial
matters.

IT IS SO ORDERED.

Dated: August 8, 2017
Syracuse, New York

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