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L.G.B. INC. v. GITANO GROUP

United States District Court, Southern District of New York


July 1, 1991

L.G.B. INC., PLAINTIFF,
v.
THE GITANO GROUP, INC., G.V. GITANO, INC. AND G.V. LICENSING, INC., DEFENDANTS.

The opinion of the court was delivered by: Whitman Knapp, District Judge.

OPINION & ORDER

By Opinion & Order dated May 17, 769 F. Supp. 1236, we denied defendant G.V. Licensing, Inc.'s ("Licensing") preliminary injunction application, and reserved decision both on plaintiff's motion for summary judgment on its claim for a declaratory judgment establishing the exclusivity of its licenses, and on defendants' motion pursuant to Fed.R.Civ.P. 12(b)(6) which (1) sought dismissal of the entire amended complaint as against The Gitano Group ("Group"), which is Licensing's parent, and G.V. Gitano, Inc. ("G.V. Gitano"); and (2) sought dismissal as against all defendants of the first and second claims (those predicated on plaintiff's assertion that its licenses are exclusive); the third, fourth and fifth claims (based on allegations of trademark infringement and unfair competition); the fourteenth and fifteenth claims (based on theories, respectively, of common law fraud and negligent misrepresentation); and the sixteenth claim (based on intentional interference with contractual relations and prospective economic advantage).

For reasons that follow, we now grant plaintiff's motion for partial summary judgment, and grant in part and deny in part defendants' motion to dismiss the amended complaint.

The background of the litigation is set forth in our May 17 opinion, familiarity with which is assumed.

I. PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

Plaintiff moves for summary judgment on its claim for a declaratory judgment establishing the exclusivity of its three licenses. Because we conclude that the agreements unambiguously evidence that the parties at the time of contracting intended the licenses to be exclusive, which intent is consistent with evidence of their subsequent conduct, the motion is granted.

A. Background

As noted in our May 17 opinion, plaintiff obtained its licenses from Murjani International Limited and its successor, Murjani Worldwide, B.V. (collectively, "Murjani"), pursuant to three agreements, each covering a different category of women's apparel. The first such agreement, dated May 18, 1984 covers swimwear and was, on November 15, 1984, expanded to include beachwear (the "Swimwear License"); the second, dated September 29, 1988, covers sweaters and coordinated sweater bottoms (the "Sweater License"); and the third, also dated September 29, covers performancewear and activewear, which include tennis, bicycle and warm-up suits (the "Activewear License").*fn1 On or about December 23, 1988, Murjani sold the Mark to defendant Licensing, along with its rights under all three licensing agreements.

The question of whether or not the licenses are exclusive arose soon after Licensing succeeded Murjani as licensor. According to the amended complaint:

    Since February 1989, various conversations and
  meetings have taken place between representatives
  from [plaintiff] and various Gitano entities. At
  those meetings, representatives of the defendants
  . . . advised [plaintiff's] representatives for
  the first time that, in their view, the license
  agreements were non-exclusive and that Gitano had
  the right, either directly itself or indirectly
  through other licensees, to use [the Mark] on
  ladies' swimwear, cover-ups, beachwear, sweaters,
  coordinated sweater bottoms, performance wear and
  activewear.

Am. Cmplt. ¶ 26

As our May 17 opinion noted, this question was discussed at a conference before us on September 12, 1989, shortly after this litigation was commenced and just prior to the start of the protracted but unsuccessful attempt at settlement. We then expressed our tentative conclusion that the three licenses seemed unambiguously exclusive.

In its motion to dismiss the amended complaint, Licensing contends, inter alia, that the licenses are unambiguously non-exclusive. Soon after the motion to dismiss was filed, plaintiff moved for summary judgment, contending that the licenses are unambiguously exclusive, and offered extrinsic evidence in an effort to demonstrate that Murjani had so intended them to be.

The extrinsic evidence offered by plaintiff included affidavits from several former Murjani employees who had participated in the negotiation, execution and/or monitoring of plaintiff's three licenses. These affiants include: Charles Cornwell, who, as vice president of Murjani's Licensing and International Operations, had negotiated the terms of the Swimwear License, and had executed it on Murjani's behalf; Hugh Docker, who, as Murjani's Design Manager, had been in charge of monitoring plaintiff's performance under the Swimwear License and who later was promoted to Vice President of Licensing Operations; Irene Narissi, who, as Murjani's Licensing Manager, participated in the negotiations for the Sweater and Activewear Licenses; and Helen Isaacson, who, as an account executive at Murjani, also was involved in the negotiations for those licenses. Each of their affidavits in various ways asserts that it is the present recollection of the affiant that it was Murjani's intention to make the particular license discussed by the affiant to confer an exclusive license. Cornwell Affid. ¶ 5; Docker Affid. ¶ 3; Narissi Affid. ¶ 4; Issacson February 21 Affid. ¶ 4. We conclude that such present recollection of past intent would be inadmissible at a trial and therefore should not be considered on this motion.*fn2 Cf. Lubrication & Maintenance, Inc. v. Union Resources Co. (S.D.N.Y. 1981) (Weinfeld, J.) 522 F. Supp. 1078, 1081 ("Determination of the intent of the parties at the time they entered into the contract is not governed by their unexpressed subjective views.")

However, the affidavit of each of the above-mentioned Murjani employees also asserts that Murjani's conduct with respect to the license under discussion was wholly consistent with such asserted intention. Thus, with respect to the Swimwear License, Cornwell and Docker both observed that during their employment Murjani never competed with plaintiff during the time it acted as licensor. Cornwell stated in his affidavit:

  In fact, during the period Murjani acted as
  licensor under the swimwear license while I was
  employed by Murjani, Murjani never manufactured
  or sold or licensed to a third party to
  manufacture or sell any such Licensed Items
  bearing [the Mark].

Cornwell Affid. ¶ 5; see Docker Affid. ¶ 3

As for Murjani's conduct during the approximately three months that it acted as licensor under the Sweater and Activewear Licenses, both Isaacson and Narissi stated that during that time, Murjani had never manufactured or sold, or licensed to another the right to manufacture or sell, items covered by the licenses. Narissi Affid. ¶ 4; Isaacson Feb. 21 Affid. ¶ 4. These assertions as to conduct stand uncontradicted in the record.

B. Discussion

Each of the agreements provides that it is governed by New York law. Swimwear License ¶ 20.3; Sweater License ¶ 21.3; Activewear License ¶ 21.3 Under New York law, we first look to the written agreements to ascertain the parties' intent, limiting our inquiry to the words of the agreements so long as the agreements set forth the parties' intent clearly and unambiguously. See Nicholas Laboratories Ltd. v. Almay, Inc. (2d Cir. 1990) 900 F.2d 19, 20-21 (applying New York law). In discerning the parties' intent from the written agreements, we of course are guided by the fundamental principle that a reasonable and effective meaning be given to every one of the agreements' provisions. See, e.g., Rothenberg v. Lincoln Farm Camp, Inc. (2d Cir. 1985) 755 F.2d 1017, 1019 ("an interpretation that gives a reasonable and effective meaning to all the terms of a contract is generally preferred to one that leaves a part unreasonable or of no effect"). Bearing these principles in mind, we conclude that the agreements unambiguously evidence the parties' intent that the licenses be exclusive. We cannot conclude otherwise in light of the nearly identical language that appears in paragraph 4.8 of each agreement.

Paragraph 4.8 of the Swimwear License provides:

    4.8 Freedom to License. In the event of
  termination of this Agreement or the receipt by
  Murjani of a notice of termination from Licensee,
  Murjani shall be free to license to others the use
  of the Mark in connection with the manufacture and
  sale of Items in the Territory, but only if all
  advertising and sale of such Items produced
  pursuant to such third party agreements is
  prohibited until after the termination of this
  Agreement.

The Sweater and Activewear Licenses contain the same language in their respective paragraphs 4.8, but insert language that provides for a third event that would trigger Murjani's freedom to license to others. Thus, paragraph 4.8 of both the Sweater and Activewear Licenses is identical to that of the Swimwear License but for the insertion of the language italicized below:

    4.8 Freedom to License. In the event of
  termination of this Agreement or the receipt by
  Murjani of a notice of termination from Licensee,
  or in the event of Licensee's failure to given
  notice of its intention to renew in accordance
  herewith, Murjani shall be free to license to
  others the use of the Mark in connection with the
  manufacture and sale of Items in the Territory, but
  only if all advertising and sale of such Items
  produced pursuant to such third-party agreements is
  prohibited until after the termination of this
  Agreement.

In our view, this provision permits no reasonable interpretation but that Murjani agreed not to grant to any third party a license that would permit competition with the plaintiff during the time that the subject licenses were in effect. Were the three licenses intended — as Licensing asserts — to be nonexclusive, the provision would be wholly superfluous, a result contrary to the above-mentioned principle of contract construction that disfavors an interpretation that would render a provision meaningless. See, e.g., Two Guys from Harrison-N.Y., Inc. v. S.F.R. Realty Assoc. (1984) 63 N.Y.2d 396, 403, 482 N.Y.S.2d 465, 468, 472 N.E.2d 315, 318 ("In construing a contract, one of a court's goals is to avoid an interpretation that would leave contractual clauses meaningless.")

The exclusivity of the licenses is further supported by the following language which appears in each agreement and, inter alia, vests Licensing with ownership of plaintiff's designs:

    8.6 Ownership of Designs and Other Materials. All
  right, title and interest in

  and to samples, sketches, designs and . . . other
  materials furnished by or to [plaintiff] or
  submitted by or to Murjani whether created by
  Murjani or [plaintiff], in connection with the
  Licensed Items, including any modifications or
  improvements thereof which may be created by
  Murjani or [plaintiff], are hereby assigned to
  and shall be the sole property of Murjani as
  between [plaintiff] and Murjani, and are licensed
  hereunder solely and exclusively for use in
  connection with the manufacture and sale of
  Licensed Items in the Territory. Murjani may use
  and permit others to use said designs and other
  materials in any manner it desires, provided that
  such use does not conflict with any rights granted
  [plaintiff] hereunder. Plaintiff specifically
  acknowledges that such designs and other materials
  may be used by Murjani and other licensees on Items
  in jurisdictions inside and outside the Territory
  and on products other than Licensed Items anywhere
  in the World.

¶ 8.6 (emphasis added) Pursuant to this provision, Murjani takes ownership of the very designs plaintiff is obligated to submit to it for approval, and is free to use those designs "in any manner it desires, provided that such use does not conflict with any rights granted [plaintiff] hereunder." If, as Licensing maintains, the parties intended the licenses to be non-exclusive, this provision would permit Licensing to authorize others, not only to compete with plaintiff, but to do so by using plaintiff's own designs. This would seem unlikely.*fn3

In opposition to plaintiff's motion, Licensing relies upon other provisions which — in the absence of the "Freedom to License" paragraph — might render the agreements ambiguous on the question of exclusivity.*fn4 However, none of these other provisions is rendered a nullity by our interpretation of the language of the "Freedom to License" paragraph.

The first such provision — and the one upon which Licensing primarily relies — reads:

  [Plaintiff] acknowledges that Murjani and its
  licensees may manufacture, distribute and sell
  Items which are the same as or similar to Items
  manufactured and sold by [plaintiff].*fn5

Sweater License ¶ 2.1; Activewear License ¶ 2.1 This provision indicates that Murjani (and others so authorized) may make and sell "Items" which are the same as "Items" manufactured and sold by plaintiff. Thus, Licensing contends, one can only conclude that the licenses are not exclusive. Licensing's contention proceeds from the assumption that the parties intended the term "Items" to include garments which not only are of the same style and design as plaintiff's, but which also bear the Mark.

This premise is by no means self-evident from the face of the agreements. Although the term "Items" appears in all three agreements, it is defined only in the Swimwear Agreement. It is there defined as "ladies swimwear." Swimwear License ¶ 1.9 The term "Licensed Items", on the other hand, also appears in each of the agreements in, among other places, the "Freedom to License" provision, and is defined in ¶ 1.10 of each agreement, respectively, as:

  "the Items bearing the Mark and which are
  manufactured by or for Licensee" (Swimwear License
  ¶ 1.10) (emphasis added)

  "women's sweaters and coordinated sweater bottoms
  bearing the Mark and which are manufactured by or
  for Licensee" (Sweater License ¶ 1.10) (emphasis
  added) "misses' performance and activewear which
  include tennis, bicycle and warm-up suits bearing
  the Mark and which are manufactured by or for
  Licensee" (Activewear License ¶ 1.10) (emphasis
  added)

Thus, each agreement is consistent with a definition of "Items" as garments falling within a particular category — respectively, "ladies swimwear", "women's sweaters and coordinated sweater bottoms", and "misses' performance and activewear" — but not bearing the Mark. Accordingly, paragraph 2.1 may reasonably be construed as permitting Murjani to manufacture and sell garments which — but for the Mark — are identical with those manufactured by plaintiff, which construction is wholly consistent with the language of the "Freedom to License" provision unambiguously evidencing the parties' intent that the agreements confer exclusive licenses to the plaintiff.

Licensing also relies on certain language of the "grant" provision common to each of the licenses. That provision reads in relevant part (emphasis added):

    2.1 License. Murjani hereby grants to [plaintiff]
  a non-assignable license during the Term of the
  Agreement, subject to all of the terms and
  conditions contained in the Agreement to
  manufacture, distribute and sell the Licensed Items
  in the Territory and to import Licensed Items into
  the Territory.

Licensing argues that the use of the indefinite article "a" and the absence of the word "exclusive" manifest the parties' intent that the licenses be non-exclusive. First, as for the use of "a," we observe that the license is not discussed prior to this provision, and the use of the indefinite article would therefore seem appropriate, irrespective of the exclusive or non-exclusive nature of such license. Second, although the insertion of the word "exclusive" would have rendered this provision determinative, the absence of the word does not as a matter of law render the license nonexclusive. See Huber Baking Co. v. Stroehmann Bros. Co. (2d Cir. 1958) 252 F.2d 945, 954 ("we . . . cannot accept, as a rule of law, the argument . . . that a license without provision as to exclusivity is necessarily and under any and all circumstances nonexclusive"), cert. denied, (1958) 358 U.S. 829, 79 S.Ct. 50, 3 L.Ed.2d 69. Moreover, construction of the agreements as exclusive does not strip the "grant" provision of meaning or effect.

In brief, we are satisfied that the language of the several agreements unambiguously confers exclusive rights upon the plaintiff, and are comforted in this conclusion by the uncontradicted evidence that Murjani's conduct as licensor was consistent with this interpretation.

II. THE MOTION TO DISMISS*fn6

A. Dismissal as to Defendants G.V. Gitano and Group

The amended complaint names three defendants: Licensing, G.V. Gitano, and Group. In its substantive allegations, plaintiff refers to all three collectively as "Gitano." The motion to dismiss seeks dismissal of the complaint as to G.V. Gitano and Group.

(1) G.V. Gitano

In the moving papers, defendants' counsel represents that G.V. Gitano, on February 17, 1989, amended its certificate of incorporation thereby changing its name to G.V. Licensing, Inc. (to which we herein refer to as "Licensing"). This comports with paragraph 4 of the amended complaint which states: "On or about February 17, 1989, G.V. Gitano purported to change its name to G.V. Licensing, Inc." We assume from defendants' counsel's representation that Licensing and G.V. Gitano are for the purpose of this litigation one and the same corporation. Based on that assumption, we strike the name G.V. Gitano from the caption of this action.

(2) Group

The motion also seeks dismissal of the amended complaint as against Group, Licensing's parent. Plaintiff primarily advances two reasons why Group should remain a defendant. First, it contends that there is "confusion as to exactly which entity is the licensor." Pltff.'s Mem. in Opp. at 46-47. It would appear that any such confusion has been dispelled by the acquisition documents — produced after the motions had been briefed — pursuant to which Licensing (sub nom. G.V. Gitano) acquired Murjani's rights under the licensing agreements. Second, plaintiff contends that Group has been wrongfully selling goods bearing the Mark. In our view, this contention would be relevant only to its claims for: (1) trademark infringement and unfair competition (the third, fourth and fifth claims for relief); and (2) tortious interference with contract and tortious interference with prospective economic advantage (the sixteenth claim for relief). However, for the reasons stated infra in Sections II.B. and II.D., the trademark infringement and unfair competition claims fail as a matter of law, as does the sixteenth claim in so far as it seeks recovery on the theory of tortious interference with contract. Accordingly, in the absence of any allegation that Group is liable for the actions of Licensing, we dismiss the complaint as against Group, except for the sixteenth claim in so far as it seeks recovery on the theory of tortious interference with prospective economic advantage.*fn7

B. The Trademark Infringement and Unfair Competition Claims

Plaintiff's third and fourth claims seek, respectively, an injunction and damages under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and its fifth claim seeks damages for common law trademark infringement. For reasons that follow, these claims are dismissed.

(1) Background

The factual allegations underlying each claim are essentially the same. Plaintiff alleges that Licensing and Group — referred to in the amended complaint collectively as "Gitano"*fn8 — manufactured and sold garments bearing the Mark in violation of plaintiff's exclusive licenses, and that such garments were inferior to those plaintiff had placed on the market, thereby damaging the quality image plaintiff had cultivated. ¶ 56. Moreover, plaintiff alleges, defendants have been offering these garments to plaintiff's customers, thereby causing confusion in the market as to who holds the right to manufacture and sell such garments. ¶¶ 51, 53.

(2) Discussion

Plaintiff does not dispute the well-settled proposition that likelihood of confusion as to the source of the goods in question is an indispensable element of its claims for trademark infringement and unfair competition, whether based upon § 43(a) of the Lanham Act or New York common law. See, e.g., Wonder Labs, Inc. v. Procter & Gamble Co. (S.D.N.Y. 1990) 728 F. Supp. 1058, 1064; Sasson Jeans, Inc. v. Sasson Jeans, L.A., Inc. (S.D.N.Y. 1986) 632 F. Supp. 1525, 1527-28. Plaintiff alleges that such confusion here arises because Licensing — in violation of plaintiff's exclusive licenses — has been manufacturing and selling, and permitting third party licensees such as Group to manufacture and sell, garments bearing the Mark, which garments fall within the categories covered by the licenses. Pltff.'s Mem. at 44-45.

The question of whether or not such conduct may give rise to the likelihood of confusion required to maintain the type of claims here asserted appears squarely to have been addressed by Judge Lasker in Ballet Makers, Inc. v. United States Shoe Corp. (S.D.N.Y. 1986) 633 F. Supp. 1328, 1331:

    This action raises the question whether
  confusion of source can exist when the disputed
  goods bear a label which has been authorized by
  the owner of the mark in issue, who has also
  licensed another manufacturer to use the same
  label. The proposition presented is a puzzling
  one, demanding resolution of the conflict between
  the rights of a licensee whose efforts have made
  the trade-marked product successful on the one
  hand, and the registrant's exclusive rights in
  the mark on the other hand.

In a detailed and well-reasoned opinion, Judge Lasker thoroughly analyzed the question, ultimately answering it in the negative. Notwithstanding that Licensing specifically referred to Ballet Makers in its papers, plaintiff in its opposition makes no reference to the decision. We concur in its apparent view that the decision cannot be faulted, and accordingly dismiss the third, fourth and fifth claims for relief.

C. The Fraud and Negligent Misrepresentation Claims

(1) The Fraud Claim

(a) Background

Plaintiff claims that it was twice defrauded by Licensing. First, plaintiff alleges that Licensing — by its president — advised plaintiff on April 24, 1989 that it should continue performing under the licenses as it had when Murjani had been the licensor. Thus, plaintiff alleges:

    32. At a meeting in New York on April 24, 1989,
  Haim Dabah, the President of [Group] and
  [Licensing], advised [plaintiff's]
  representatives that [plaintiff] should continue
  conducting its Gloria Vanderbilt business exactly
  as it had been, and that everything would remain
  "status quo" at least until after defendants'
  representatives visited [plaintiff's] facilities
  in California, which did not occur until July 11,
  1989 despite [plaintiff's] repeated requests in
  May and June 1989 that Gitano's representatives
  visit [plaintiff's] plant in California.

    33. By notice dated May 15, 1989 and letter
  dated May 18, 1989, Gitano advised [plaintiff] of
  its newly established guidelines to be used in
  connection with its approval of [plaintiff's]
  products, designs, packaging and advertising.
  According to Gitano's letter, these new
  guidelines were to commence in January 1990 and
  stated that [plaintiff] should file certain
  annual notices with Gitano starting on January 5,
  1990. It was clearly contemplated by this letter,
  as confirmed by Haim Dabah's "status quo"
  representations, that Gitano's new approval
  guidelines would become effective in January
  1990.

    34. On June 12, 1989, counsel for the
  defendants advised [plaintiff's] counsel in
  writing that, in defendants' view, the license
  agreements were nonexclusive. Thereafter, after
  having advised [plaintiff] that it should
  continue to conduct its business in the same
  manner as before, and after having advised
  [plaintiff] that the new guidelines would not
  take effect until January 1990, the defendants
  commenced what appears to be a willful, malicious
  and intentional pattern of harassment and bad
  faith conduct towards [plaintiff].

The "pattern of harassment" allegedly included various complaints by Licensing in late June of 1989 that plaintiff had failed to comply with the very approval guidelines that were not to have become effective until January of 1990. Moreover, plaintiff alleges, Gitano — by letter dated July 27, 1989 — advised plaintiff that because its entire Fall 1989 line had not been approved,
the sale of such items was to be discontinued immediately. ¶¶ 36-37. According to plaintiff, however, the Fall line had been designed and manufactured according to the timetable in operation when Murjani had been the licensor, i.e. in conformity with the "status quo" Licensing had asserted would continue.

The second alleged misrepresentation took place during the latter half of the settlement negotiations that began soon after this action was filed:

  44. After the commencement of this lawsuit,
  Gitano apparently realized that [plaintiff] would
  not give in to the pressure being applied by
  Gitano and give up the exclusivity of its
  agreements, at least not without just
  compensation. In the Fall of 1989, [plaintiff]
  agreed in good faith to negotiate with Gitano
  three new license agreements pursuant to which
  (a) [plaintiff] would have the exclusive right to
  sell the licensed items to the lower segment of
  the market only, being the warehouse clubs, (b)
  Gitano would have the right to sell the licensed
  items to the rest of the market, including the
  mass merchants and speciality stores, and (c)
  plaintiff would receive significant cash
  compensation.

  45. After negotiations on the details of the new
  agreements, [plaintiff] and Gitano reached an
  agreement that settled all the substantive
  disputes between the parties and only required
  the parties' agreement on a few minor points
  before being executed. Indeed, Gitano stated on
  numerous occasions that the agreement would be
  finalized and signed. For example, in a May 11,
  1990 letter to [plaintiff], Isaac Dabah of Gitano
  advised [plaintiff] that Gitano would sign the
  new agreements.

  46. Since marketing and sales efforts to
  customers and potential customers must commence
  many months before actual sales and deliveries of
  goods, in about the Spring of 1990 [plaintiff]
  redirected its marketing efforts in a manner
  consistent with the new license agreements even
  though those license agreements were not yet
  executed. In reliance upon Gitano's assurance and
  representations that the new agreements would be
  signed, [plaintiff] did not attempt to sell
  licensed items to customers and potential
  customers except those few warehouse club
  customers that it would be permitted to sell to
  under the new license agreements.

  47. Because [plaintiff] was giving up a
  substantial portion of its market, the new
  license agreement required minimum sales in an
  amount substantially less than those set forth in
  the original license agreements. Further, the new
  license agreements eliminated any obligation that
  [plaintiff] advertise.

  48. Upon information and belief, Gitano was aware
  of [plaintiff's] justifiable reliance on its
  representations. After [plaintiff] had changed
  its business plan and strategy, in or about
  August 1990 Gitano abruptly refused to sign the
  agreement and called off all negotiations,
  thereby causing [plaintiff] to incur substantial
  cost and expense, substantial reduction in
  [plaintiff's] 1990 sales and preventing
  [plaintiff] from reaching certain 1990 minimum
  sales levels provided for in the original license
  agreements.

  49. Upon information and belief, Gitano's refusal
  to sign the new license agreements was tied to a
  change in Gitano's business plan for the Gloria
  Vanderbilt line. Gitano apparently determined
  that its initial plan to sell the Gloria
  Vanderbilt line to the higher end of the market
  was no longer viable.

From the foregoing, plaintiff alleges that, "in the Spring and Summer of 1990 defendants negotiated new license agreements with [plaintiff] in bad faith and falsely represented to [plaintiff] that they would enter into the proposed agreement and, after [plaintiff] justifiably relied [on] defendants' representation, refused to sign the agreements." ¶ 113.

Plaintiff avers that both misrepresentations "were knowingly and intentionally false, were not known to plaintiff to be false when made, and were made with the intention of inducing plaintiff to rely thereon." ¶ 114. The ad damnum clause seeks $50 million in compensatory damages on this claim.

(b) Discussion

To state a claim for fraud, one must allege, inter alia, that the defendant intentionally made a material misrepresentation for the purpose of inducing the claimant to rely upon it, and that such reliance resulted in injury. See, e.g., Murray v. Xerox Corp. (2d Cir. 1987) 811 F.2d 118, 121.

Simply stated, the gravamen of the claim here — in so far as it is based on the "status quo" representation — is that Licensing lulled plaintiff into believing that it could — without risk of termination — continue performing under the licenses in the manner to which it had become accustomed. In our view, the claim is deficient because plaintiff fails to plead any injury suffered as a result of its performance in reliance on such representation. Concededly, plaintiff would be adversely affected should Licensing in this litigation successfully assert that such performance in whole or in part constitutes grounds for termination of the licenses. However, such an assertion would be unavailing were plaintiff to establish that Licensing's "status quo" representation gave rise to an estoppel. In other words, the allegations underlying this aspect of the fraud claim would — if substantiated — give rise to the defense of estoppel rather than to an affirmative claim for damages.

The claim based on the alleged "settlement" misrepresentation must be dismissed as well. In substance, plaintiff alleges that Licensing — by letter dated May 11, 1990 — represented that it would sign certain settlement agreements and that plaintiff, relying on its understanding that new licenses would be forthcoming — pursuant to which it would give up certain rights claimed under the old licenses — acted in a more restricted manner which conformed to the agreements it fully expected Licensing would ultimately execute. Conspicuously absent is any allegation that Licensing at any time asked plaintiff to act as though the proposed, albeit unsigned, agreements had been executed, or any allegation that Licensing was aware that plaintiff intended so to act. In the absence of such allegations we cannot perceive how one can infer that Licensing's purpose in stating that it would sign the settlement agreements was to induce the action plaintiff chose to take.

(2) The Negligent Misrepresentation Claim

The claim of negligent misrepresentation is predicated on the same two misrepresentations that underlie the fraud claim. In so far as the negligent misrepresentation claim is based on the "status quo" representation, it is dismissed for the reason that we dismissed the claim of fraud based on that representation, namely, the failure to plead injury.

In so far as the claim is based on the "settlement" representation made in the spring of 1990, it also must fail, as the requisite element of a special relationship is lacking. "The law of negligent misrepresentation, as enunciated in New York, recognizes that `generally there is no liability for words negligently spoken' but that `there is an exception when the parties' relationship suggests a closer degree of trust and reliance than that of the ordinary buyer and seller.'" American Protein Corp. v. AB Volvo (2d Cir.) 844 F.2d 56, 63 (quoting Coolite Corp. v. American Cyanamid Co. (1st Dep't 1976) 52 A.D.2d 486, 384 N.Y.S.2d 808, 811), cert. denied, (1988) 488 U.S. 852, 109 S.Ct. 136, 102 L.Ed.2d 109. Accordingly, it is well-settled that the "special relationship required by New York law [is] an essential element of a claim of negligent misrepresentation." Sanitoy, Inc. v. Shapiro (S.D.N.Y. 1989) 705 F. Supp. 152, 155.

Plaintiff here contends that this requirement is met for present purposes because of the parties' contractual relations arising out of the license agreements. ¶ 121. However, plaintiff wholly ignores its own allegations about the status of the parties' relationship at the time the "settlement" representation was made. As is apparent from the face of the amended complaint, that representation occurred approximately eight months after this litigation had been commenced. As we read the complaint, the litigation was prompted not by an amicable yet insoluble dispute, but by "a pattern of harassment and bad faith conduct" directed against the plaintiff. According to the amended complaint, such conduct included:

    (a) requesting repeated inspections of
  [plaintiff's] plants which have disrupted
  [plaintiff's] business environment and workplace
  and adversely affected employee morale, and
  singling out [plaintiff] as opposed to other
  licensees with whom there presumably is no
  dispute with concerning exclusivity, for such
  inspections;

    (b) refusing to show [plaintiff] its styles and
  samples of other Gloria Vanderbilt products that
  Gitano has begun manufacturing and selling;

    (c) refusing, despite repeated requests, to
  provide [plaintiff] with guidelines for its
  lines, when those lines were in the design and
  sample stage before the sale and production stage
  started; and

    (d) repeatedly threatening [plaintiff] that,
  unless [plaintiff] agrees that the license
  agreements are nonexclusive, the harassment and
  intimidation will continue, stating, for example,
  that Gitano is the "master" and [plaintiff] is
  its "servant."

¶ 40. In short, plaintiff's own allegations belie any contention that the parties — at the time the "settlement" representation is claimed to have been made — enjoyed a "closer degree of trust and reliance than that of the ordinary buyer and seller." American Protein Corp., supra.

In light of the foregoing, the negligent misrepresentation claim is dismissed.

D. The Tortious Interference Claims

Plaintiff's sixteenth claim for relief seeks compensatory and punitive damages under two theories: tortious interference with contract and tortious interference with prospective economic advantage. ¶¶ 123-25. We sustain the challenge to this claim in so far as plaintiff seeks to recover on the theory of tortious interference with contract, but reject it in so far as it seeks recovery upon the theory of tortious interference with prospective economic advantage.

(1) Background

Plaintiff rests its claim upon allegations that "the defendants have interfered with and destroyed [plaintiff's] relationships with its customers and its potential customers." Pltff.'s Mem. in Opp. at 38. In this regard, the amended complaint recites the following:

    50. After Gitano refused to sign the new
  license agreements, [plaintiff] discovered that
  Gitano was selling under the Gloria Vanderbilt
  label items that are within the scope of
  [plaintiff's] licenses. Such sales violate the
  exclusivity of [plaintiff's] license agreements.

    51. Gitano has been selling under the Gloria
  Vanderbilt label items licensed to [plaintiff] by
  the license agreement in its Gitano stores.

    52. In addition, Gitano has either sold or
  attempted to sell several of the same or similar
  items offered by [plaintiff] under the Gloria
  Vanderbilt label to many of [plaintiff's]
  customers including, among others, the Wholesale
  Club, J.C. Penney and the Price Club.

    53. Other [of plaintiff's] customers and
  potential customers have been approached by
  Gitano to purchase from Gitano items licensed to
  [plaintiff] under the license agreements. Some of
  these customers and potential customers have
  refused to buy Gloria Vanderbilt products from
  [plaintiff] citing to confusion created by Gitano
  as to who has the right to sell these items.

    54. Gitano's efforts to sell [plaintiff's]
  lines to [plaintiff's] customers has interfered
  with and damage[d] [plaintiff's] relationships
  with its customers and potential customers. For
  example:

      (a) A representative of defendants approached
    the buyer for Price Savers, [a customer of the
    plaintiff], following which Price Savers
    reduced its annual order with [plaintiff] by
    over $600,000;

      (b) Montgomery Ward, one of [plaintiff's]
    longstanding customers for its Gloria
    Vanderbilt line while Murjani

    was the licensor and which also carried lines
    of women's clothing under the Gitano label,
    suddenly stopped buying the Gloria Vanderbilt
    line from [plaintiff] after being approached by
    a representative of Gitano.

(2) Discussion

(a) Tortious Interference with Contract

To state a claim for tortious interference with contract under New York law, the plaintiff must allege: (1) the existence of a valid contract between itself and a third party; (2) defendant's knowledge of that contract; (3) defendant's intentional procurement of a breach of that contract by the third party; and (4) damages. See, e.g., Walters v. Fullwood (S.D.N.Y. 1987) (Brieant, C.J.) 675 F. Supp. 155, 159 (citing Guard-Life Corp. v. S. Parker Hardware Mfg. Corp. (1980) 50 N.Y.2d 183, 428 N.Y.S.2d 628, 406 N.E.2d 445); Martin Ice Cream Co. v. Chipwich, Inc. (S.D.N.Y. 1983) 554 F. Supp. 933, 945.

Plaintiff's claim under this theory must fall because it fails to plead the existence of a valid contract with a third party. While the complaint alleges that "customers and potential customers" have "refused" to buy plaintiff's goods, that one customer "reduced its annual order," and that another "suddenly stopped buying" from plaintiff, there is no allegation that any customer or potential customer was obligated by contract to behave otherwise, let alone that its failure so to behave constituted a breach of such contract. Accordingly, plaintiff has failed to state a cause of action for tortious interference with contract.

       (b) Tortious Interference with Prospective Economic
                            Advantage

To state a claim under this theory, the complaint must allege that defendant interfered with business relations existing between plaintiff and a third party, "either with the sole purpose of harming plaintiff or `by means that are dishonest, unfair or in any other way improper.'" Martin Ice Cream Co. v. Chipwich, Inc. (S.D.N.Y. 1983) 554 F. Supp. 933, 945 (emphasis in original) (quoting Robbins v. Ogden (S.D.N.Y. 1980) 490 F. Supp. 801, 811). Where such interference is intended "'at least in part to advance the competing interest of the interferer' the interference will be excused unless the means employed include `physical violence, fraud or misrepresentation, civil suits and criminal prosecutions and some degrees of economic pressure; they do not, however, include persuasion alone.'" Strapex Corp. v. Metaverpa N.V. (S.D.N.Y. 1985) 607 F. Supp. 1047, 1050 (quoting Guard-Life Corp. v. S. Parker Hardware Mfg. Corp. (1980) 50 N Y2d 183, 428 N.Y.S.2d 628, 632, 406 N.E.2d 445).

According to the complaint, the conduct from which this claim arises was motivated in part by an interest in competing with the plaintiff. See ¶¶ 21-24, 27, 58, 67. Accordingly, the claim must be supported by sufficient factual allegations from which it may be inferred that "improper means" were employed to effect the alleged interference.

The gravamen of the claim is that Licensing and Group — in marketing garments in violation of plaintiff's exclusive licenses — approached plaintiff's customers and diverted their business to themselves. Licensing contends that such conduct cannot be said to constitute "improper means." However, viewing the allegations in the light most favorable to plaintiff, we cannot say that they permit no set of facts whereby "improper means" could be established. For example, the allegations permit an inference that Licensing and Group, its parent, knew or believed with substantial certainty that the licenses were exclusive, and nevertheless intentionally represented to plaintiff's customers, either expressly or through conduct, that they could lawfully market garments falling within the scope of the licenses.*fn9 We accordingly are constrained to deny the motion in so far as it seeks dismissal of the sixteenth claim based on the theory of tortious interference with prospective economic advantage.

CONCLUSION

Plaintiff's motion for summary judgment on its first claim, which seeks a declaratory judgment that its licenses are exclusive, is granted. Licensing's motion to dismiss is granted in so far as it seeks dismissal of the amended complaint's third, fourth, fifth, fourteenth, and fifteenth claims for relief. The name G.V. Gitano, Inc. is struck from the caption, and the complaint is dismissed as against The Gitano Group, Inc., except that the sixteenth claim — seeking damages for tortious interference with prospective economic advantage — asserted against it shall stand.

SO ORDERED.


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