United States District Court, S.D. New York
May 12, 2004.
GRIGSBY & ASSOCIATES, INC. and CALVIN B. GRIGSBY, Plaintiffs
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
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.
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
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.