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LCO Destiny, LLC v. Michaels Stores

February 12, 2008

LCO DESTINY, LLC, PLAINTIFF,
v.
MICHAELS STORES, INC., MICHAELS STORES PROCUREMENT COMPANY INC., BP INDUSTRIES INCORPORATED, DEFENDANT(S).



The opinion of the court was delivered by: Thomas J. McAVOY, Senior United States District Judge

DECISION & ORDER

I. INTRODUCTION

Plaintiff LCO Destiny, LLC ("LCO") commenced this action asserting claims sounding in federal trademark infringement (First and Second Counts), deceptive acts (Third Count), false advertising (Fourth Count), unfair competition (Fifth Count), breach of contract (Sixth Count), and fraudulent misrepresentation and inducement (Seventh Count). Defendant BP Industries Incorporated ("BP") moves to dismiss the Seventh Count pursuant to Fed. R. Civ. P. 12(b)(6).

II. STANDARD OF REVIEW

A motion brought under Fed. R. Civ. P. 12(b)(6) tests the legal sufficiency of the claims pleaded in a case. On a motion to dismiss, all factual allegations in the complaint are accepted as true, Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993), and the Court must determine whether Plaintiff has pleaded "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1969 (2007). As such, the Court must determine whether the "[f]actual allegations . . . raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id., at 1965; see Barkley v. Olympia Mortgage Co., 2007 WL 2437810, at * 9 (E.D.N.Y. Aug. 22, 2007).

III. BACKGROUND

LCO is a manufacturer and distributor of picture frames, and has used the trademarks "TIMELESS" and "TIMELESS FRAME" to market and sell picture frames in New York State and elsewhere. Compl. ¶¶ 9-10. LCO secured U.S. Trademark Registration No. 3,028,273 for the trademark "TIMELESS FRAMES" in connection with "picture frames." Compl. ¶ 11. BP marketed and sold picture frames under the trademark "TIMELESS ELEGANCE" in New York State and elsewhere. Compl. ¶ 8. By letter dated April 17, 2007, LCO's attorney notified BP of LCO's use of, registration of, and rights in the term "TIMELESS FRAMES" and asked for a written explanation of BP's intentions regarding any continued use of the term "TIMELESS" or any substantially similar term in connection with picture frames and related products. Compl. ¶ 14. The letter also inquired about BP's then-pending application to register the trademark "TIMELESS ELEGANCE" with the United States Patent and Trademark Office ("USPTO"). Compl. ¶ 14.

By letter dated June 11, 2007, BP's attorney responded that BP did not wish to incur the considerable expense to litigate the matter and had decided to withdraw its application to register "TIMELESS ELEGANCE." Compl. ¶ 15. BP also indicated that it had decided to take immediate steps to phase out the use of "TIMELESS ELEGANCE" for its products, and that it believed this matter to be closed. Compl. ¶ 15. BP filed a formal request with the USPTO on August 9, 2007 to abandon BP's then-pending application to register "TIMELESS ELEGANCE." Compl. ¶ 16. The USPTO issued a formal Notice of Abandonment of the application on August 10, 2007. Compl. ¶ 16.

LCO contends that it "relied upon the representations, promises, assurances, and agreement of Defendant BP in taking immediate steps to phase out the use of 'TIMELESS ELEGANCE' for its products in refraining from immediate enforcement of its rights against Defendant BP." Compl. ¶ 18. However, LCO learned that BP continued to market, distribute, and sell picture frames under the "TIMELESS ELEGANCE" mark. Compl. ¶ 19. LCO asserts that BP "intended and planned as of the June 11, 2007 letter that it would not take immediate steps to phase out the use of 'TIMELESS ELEGANCE' for its products, but rather, knowingly and intentionally made the false representation and promise that it would take such immediate steps." Compl. ¶ 19. In Count Six, entitled "Breach of Contract," LCO asserts:

Defendant BP has breached its agreement with Plaintiff to take immediate steps to phase out the use of "TIMELESS ELEGANCE" for its products, which has allowed Defendant BP to gain illegitimate benefits and caused Plaintiff damages. Compl. ¶ 33.

In Count Seven, entitled "Fraudulent Misrepresentation and Inducement," LCO asserts:

Defendant BP fraudulently misrepresented to Plaintiff its decision and intent to take immediate steps to phase out the use of "TIMELESS ELEGANCE" for its products and fraudulently induced Plaintiff to forego further enforcement of its rights against Defendant BP.

Compl. ¶ 35. LCO further alleges in Count Seven that "Defendant BP has illegitimately benefitted from, and Plaintiff has been damaged by, Defendant BP's fraudulent misrepresentation and inducement." Compl. ¶ 36.

BP moves to dismiss Count Seven on the grounds that, under New York law,*fn1 a cause of action for fraud may not be maintained simultaneously with a cause of action for breach of contract when the only alleged fraud ...


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