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GRIGSBY & ASSOCIATES v. RICE DERIVATIVE HOLDINGS

United States District Court, S.D. New York


May 12, 2004.

GRIGSBY & ASSOCIATES, INC. and CALVIN B. GRIGSBY, Plaintiffs
v.
RICE DERIVATIVE HOLDINGS, L.P., RICE DERIVATIVE HOLDINGS CORPORATION, J. DONALD RICE, JR., GBR DERIVATIVE PRODUCTS COMPANY, L.P., GBR DERIVATIVE PRODUCTS COPORATION.GBDP, L.P., GBDP HOLDINGS, L.P., GBDP CORPORATION, GB DERIVATIVE PRODUCTS COMPANY, L.P., and GB DERIVATIVE PRODUCTS CORPORATION, Defendants

The opinion of the court was delivered by: RICHARD OWEN, Senior District Judge

OPINION AND ORDER

In July, 2000, Plaintiffs Calvin B. Grigsby and Grigsby and Associates filed this action against J. Donald Rice, Jr. and two other Rice entities asserting claims for inspection and copying of books and records, an accounting*fn1, breach of fiduciary duty, unjust enrichment and constructive trust. Plaintiffs filed an Amended Complaint later that month to clarify the names of the corporate and limited partnership entities. Plaintiff's now seek to amend the First Amended Complaint to add several new defendants and causes of action.

Thus, specifically before the Court is plaintiffs' motion to add Miami-Dade County and various Rice entities as defendants and to add the causes of action for: 1) conversion; 2) breach of fiduciary duty; 3) misappropriation of trade secrets; 4) Lanham Act; 5) breach of contract; 6) intentional interference with a contract; 7) declaratory relief; and 8) injunctive relief.

  Plaintiffs' request to realign the parties to have current defendants GBR Derivative Products Company, L.P., GBR Derivative Products Company, L.P., GBDP Holdings, L.P., GBDP Corporation (collectively, the "GB Defendants") added as plaintiffs was abandoned by plaintiffs in their reply papers, plaintiffs accepting that this would destroy diversity jurisdiction in this Court.

  Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend a pleading "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). However, leave to amend will be denied when the proposed amendment is legally insufficient and it would be futile to grant leave to amend. Foman v. Davis, 371 U.S. 178, 182 (1962), McNally v. Yarnall, 764 F. Supp. 853, 855 (S.D.N.Y. 1991).

 1. Breach of Contract and Declaratory Relief Claims

  As to the proposed cause of action against Miami-Dade County, plaintiffs contend the County breached the terms of a Trust Indenture in 1997 when it appointed a swap provider (RFPC, Ltd.) who was not specifically listed in the Trust Indenture document. However, Section 8.20 of the Trust Indenture entitled "Swap Providers: Appointment and Acceptance of Duties" specifically provides that "[t]he County may appoint one or more Swap Providers for the Bonds of each Series, and may at any time, or from time to time, appoint one or more other Swap Providers." (emphasis supplied). While the definition of "swap provider" in the Trust Indenture designates specific organizations, as noted and quoted above, it does not limit the definition to only those organizations and none other.

  In light of this, there was no breach of the Trust Indenture when the County entered into the swap agreement with RFPC, Ltd. Accordingly, plaintiffs cannot sustain a claim against Miami-Dade County for breach of contract for the exercise of rights granted by the contract. See Nordic Bank PLC v. Trend Group, Ltd., 619 F. Supp. 542, 562 (S.D.N.Y. 1985).

  Plaintiffs' motion for leave to add Miami-Dade County as a new defendant is futile and is denied.

 2. Intentional Interference with Contract

  Plaintiffs seek leave to add a claim for intentional interference with contract against the original defendants and the proposed new defendant Rice entities. Plaintiffs claim that these defendants interfered with the above-mentioned contract between plaintiffs and Miami-Dade County. However, a claim for intentional interference with contract fails in the absence of a valid claim for breach of contract. See American Online Latino v. America Online, Inc., 250 F. Supp.2d 351, 361-62 (S.D.N.Y. 2003). Thus, in light of the absence of a breach of contract by Miami-Dade County, the claim for intentional interference with the contract against the defendants is also futile and is denied.

 3. Lanham Act Claim

  Plaintiffs also move to assert a claim under § 43(a) of the Lanham Act. 15 U.S.C. § 1125(a). Section 43(a) affords protection for unregistered marks by providing a cause of action for the use of "any word, term, name, symbol . . . or any false designation of origin . . . which is likely to cause confusion . . . as to the origin . . . of . . . goods." Id.

  Plaintiffs allege that defendant Rice has wrongfully used plaintiff GBDP's logo. The allegedly purloined portion of plaintiffs' logo consists of four interlaced triangles. While plaintiffs have either the letters GBDP or GBR in conjunction with "GBR Financial Products Company an affiliate of Grigsby & Associates," the defendants have the name "Rice Financial Products Company."

  Under trademark law, geometric shapes or designs contained in a logo are generally not considered inherently distinctive and are protectable only upon proof of secondary meaning.*fn2 See 1 J.T. McCarthy, Trademarks and Unfair Competition, § 7:33, at 89 (4th ed. 2003). A trademark has secondary meaning only "when, `in the minds of the public, the primary significance of a [mark] is to identify the source of the product rather than the product itself.'" City Merch. Inc. v. Kings Overseas Corp., No. 99 CV 10456, 2001 WL 286724 at 3 (S.D.N.Y) (citing Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 211(2000) See also Guess? Inc. v. Nationwide Time Inc., 16 U.S.P.Q.2d 1804 (T.T.A.B. 1990) (an equilateral triangle used as a mark for watches falls in the category of a common, basic geometric shape which is inherently non-distinctive and thus needs proof of secondary meaning). Factors recognized as tending to show secondary meaning of a mark include advertising expenditures; consumer studies linking the name to a source; sales success; unsolicited media coverage; attempts to plagiarize the mark; and length of exclusivity of the mark's use. Stem's Miracle-Gro Products, Inc. v. Shark Products, Inc., 823 F. Supp. 1077, 1084 (S.D.N.Y. 1993) (citations omitted). Here, plaintiffs' Lanham Act claim is based on a mark that consists of non-distinct geometric shapes. Plaintiffs, however, do not plead secondary meaning, nor, it appears could they; their proposed complaint, legal memoranda and oral argument at the hearing, being devoid of any indication that plaintiffs can allege in good faith secondary meaning. Therefore, the proposed claim is legally insufficient and leave to amend would be futile. It is denied.

 4. Remaining state law claims

  The Court grants leave to further amend the plaintiffs' remaining state law claims.

 5. Rice entities

  The Court likewise grants leave to further amend the complaint to include RFPC, LLC; RFP, Ltd.; Rice Financial Products Company; and RFPC Holdings, Inc. (the Rice entities) as defendants. Grigsby's affidavits of July 22, 2003 and August 8, 2003 contain a plethora of fact statements which, if proved, at a minimum support the issues thereby raised to be subjects for the trier of the facts' consideration.

  So Ordered.


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