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MELWANI v. JAIN

April 28, 2004.

PRAKASH MELWANI, Plaintiff; -against- PRADIP K. JAIN, PRAMOD K. JAIN, ROYAE SILK PRODUCTS, INC. and, DIASTAR, INC., Defendants


The opinion of the court was delivered by: DEBRA FREEMAN, Magistrate Judge

MEMORANDUM AND ORDER

In this action, before me on consent pursuant to 28 U.S.C. § 636(c), pro se plaintiff Prakash Melwani ("Melwani") asserts six claims against defendants, alleging improper registration of a website, two counts of false advertising under the Eanham Act, two counts of tortious interference with prospective business advantage or relations, and unfair competition under state law. Defendants have moved for partial summary judgment dismissing Count Three (false advertising) and Count Five (tortious interference), arguing that these two claims as against defendant Pramod Jain ("Pramod") were released as part of a settlement in a prior action. In addition, defendants maintain that there is no factual support for asserting these two claims against Pramod or defendant Diastar, Inc ("DI").*fn1 For the reasons set forth herein, defendants motion for partial summary judgment is granted with respect to Counts Three and Five against defendant Pramod; with respect to defendant DI, the Court reserves decision pending further submissions, as discussed below.

BACKGROUND*fn2

 A. The Parties

  In 1978, Melwani founded Royal Silk Ltd. ("RSL"), a company engaged in the mail-order catalog sale of silk garments and related products. (Otis Aff. ¶ 5.) RSL owned certain registered trademarks, including a "Royal Silk" service mark for the mail-order and retail-store sale of clothing and similar fashion accessories made wholly or partially of silk. (Id.) Sometime in 1988, RSL filed for bankruptcy in the United States Bankruptcy Court for the District of New Jersey. (Id. ¶ 6.)

  The defendant Jain brothers (Pradip and Pramod) are officers of corporate defendants RSPI and DI. (See Affidavit of Pradip Jain in Support of Motion for Partial Summary Judgment ("Pradip Aff") dated Nov. 19, 2002, ¶ 1; Affidavit of Pramod Jain in Support of Motion for Partial Summary Judgment ("Pramod Aff") dated Nov. 19, 2002, ¶ 1.) In September 1991, as part of the liquidation of RSL, the Jain brothers and RSPI, through a related company called Ultra Silk Inc. ("USI"), purchased from a secured creditor of RSL the "Royal Silk" service mark and the goodwill associated with it. (Id. ¶ 7.) Melwani, who had become acquainted with the Jain brothers, assisted the defendants with the purchase of the "Royal Silk" service mark, which the defendants then registered with the United States Patent and Trademark Office. (Id. ¶¶ 8-9.)

  From approximately October 1991 through December 1993, Melwani then rendered consultation services to RSPI and a related company, USI. (Id. ¶ 10.) When, however, business failed to prosper as defendants had hoped it would, the relationship with Melwani was terminated. (Id.)

 B. Litigation History

  In 1998, Melwani commenced an action in the New York State Supreme Court, New York County (the "state court action"),*fn3 against Pradip, Pramod, and USI, alleging various contract and other claims, and asserting that Melwani was entitled to a portion of the profits of USI's silk business. (Id. ¶ 12.) Simultaneously, Melwani filed an action in this Court against RSPI (the "1998 federal action"), asserting the same claims as were being asserted in the state court action.*fn4 (Id. ¶ 13.) Melwani, however, subsequently voluntarily discontinued the 1998 federal action and joined RSPI as a defendant in the state court action instead. (Id.; see Prakash Melwani v. Royal Silk Products, Inc., No. 98 Civ. 4134 (TPG), Stipulation of Voluntary Dismissal, entered Feb. 25, 1999 (Dkt. 5).) The state court action was tried, resulting in a verdict for the defendants. (Defs.' Mem. at 4; Ottis Aff. Ex. B.) While the state court action was still in the discovery phase, Melwani filed another action in this Court against Pradip and RSPI (the "2000 federal action").*fn5 (Ottis Aff. ¶ 15.) In that action Melwani alleged that he had all rights to the name and mark "Royal Silk," for which he had registered a new trademark for clothing and apparel, and that Pradip and RSPI, by launching and operating a commercial website, "royalsilk.com," violated the Lanham Act and tortiously interfered with Melwani's prospective plans for a new business to be known as Royal Silk. (Id.)

 C. The 2001 Settlement

  On August 10, 2001, the 2000 federal action was settled on the record before United States Magistrate Judge Andrew J. Peck (Id. ¶ 16, Ex. A (Transcript of Aug. 10, 2001 conference before Judge Peck ("Settlement Tr.").) The settlement was a global settlement, which finally resolved the state court action, as well as the pending federal action.

  As memorialized on the record, the specific terms of the settlement agreement were as follows: In addition to agreeing to injunctive relief, the federal defendants agreed to pay Melwani $15,000 in installments. (See Settlement Tr. p.6, 11.6-11.) In exchange, Melwani agreed to refrain from appealing, or to withdraw any appeal he may have already filed in, the state court action. (See id. p.8, 11. 1-8.) Further, Judge Peck confirmed that:

  upon full payment of all amounts hereunder, [the parties] shall exchange general releases. Mr. Melwani further agrees and the defendants agree that Mr. Melwani and the state court defendants will also exchange general releases. The state court defendants, in addition to Pradip Jain and Royal Silk Products, Inc., are Promod [sic] Jain and Ultra Silk, Inc. (Id. p.8, 11. 16-23.) Finally, Judge Peck placed on the record that "[a]ll claims and counterclaims in this action are hereby discontinued with prejudice in accordance with the terms of the stipulation." (Id. p.8, 11. 23-25.)

  Prior to concluding the conference, Judge Peck questioned Melwani, under oath, to ensure that he understood the implications of the settlement agreement based on what had been said both on and off the record. (See id. p.9, 1.21 — p. 10, 1.8.) Melwani confirmed on the record that he ...


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