The opinion of the court was delivered by: Wood, U.S.D.J.
In this Order, the Court (1) reconsiders and modifies in part the Court's December 21, 2007 Order (the "12/21/07 Order"), which denied Plaintiff's motion for partial summary judgment and granted in part and denied in part Defendants' motion for summary judgment; and (2) addresses Plaintiff's motion to dismiss Defendants' counterclaims. For the reasons stated below, the Court (1) holds that the contract at issue in this action does not authorize Defendants' alleged website activities; and (2) grants Plaintiff's motion to dismiss Defendants' counterclaims.
This action arises from an April 11, 1988 agreement between the late baseball player Mickey Mantle*fn1 and Defendant Lewis Rothgeb (the "Agreement"), pursuant to which Defendant Rothgeb agreed to produce and distribute a documentary film about Mr. Mantle (the "Picture"). Mr. Mantle and Defendant Baseball Legend Video, Ltd. ("BLV") amended the Agreement on May 1, 1989 (the "Amendment").*fn2 The Amended Agreement provided that BLV would pay Mr. Mantle royalties from the Picture and merchandise sales. It gave BLV the right to use Mr. Mantle's name, biography, physical likeness, and voice (the "Mantle Indicia") for limited purposes related to promoting the Picture and Picture-related merchandise. See Agreement ¶¶ 3.2, 4.1, 4.5; Amendment ¶¶ 1, 2. It also required Mr. Mantle to "perform such services as may be reasonably required," including identifying potential purchasers of the Picture. See Agreement ¶ 2.1.
Plaintiff filed suit against Defendants on June 8, 2004, alleging (1) breach of contract; (2) trademark infringement and dilution; (3) infringement of the right to publicity; (4) false designation of origin; (5) unfair competition; (6) misappropriation of goodwill; and (7) unjust enrichment.*fn3
Plaintiff also sought (1) a declaratory judgment that the contract among the parties has terminated (the "Termination claim"); and (2) an accounting of Defendants' income arising from their alleged breach of contract (the "Accounting claim"). In their amended Answer, Defendants asserted counterclaims for breach of contract and tortious interference with prospective business relations.
II. Reconsideration of 12/21/07 Order
By its own motion, the Court reconsiders and modifies in part its 12/21/07 Order. See Gordon & Breach Science Publishers S.A. v. American Institute of Physics, 905 F. Supp. 169, 177 (S.D.N.Y. 1995) ("A district court has the inherent authority to reconsider and modify its interlocutory orders."). In the 12/21/07 Order, the Court held, inter alia, that the Amended Agreement was ambiguous with respect to whether it authorized Defendants' alleged website activities. The Court relied on this holding in its analysis of (1) Plaintiff's contract claims regarding Defendants' website activities, (2) the Termination claim, and (3) the trademark-related claims (together, the "three affected claims"). On reconsideration, the Court concludes that the Amended Agreement is unambiguous and does not authorize Defendants' website activities. However, because there are remaining questions of material fact regarding the three affected claims, the Court denies both Plaintiff and Defendants summary judgment with respect to these claims.
On February 6, 2007, Defendants filed a motion for summary judgment with respect to the entire Complaint. On February 8, 2007, Plaintiff filed a motion for partial summary judgment with respect to its claims for (1) breach of contract; (2) trademark infringement and dilution; (3) unfair competition; (4) false designation of origin; and (5) declaratory judgment. The Court referred both motions to Magistrate Judge Pitman.*fn4
On August 22, 2007, Magistrate Judge Pitman issued a Report and Recommendation (the "8/22/07 Report"), familiarity with which is assumed.*fn5 In the 12/21/07 Order, the Court adopted the 8/22/07 Report in part. The Court held, inter alia, that the Amended Agreement was ambiguous with respect to whether it permitted Defendants' alleged website activities,*fn6 and the Court relied on this conclusion in its analysis of the three affected claims. The Court now (1) reconsiders and modifies its holding that the Amended Agreement is ambiguous, and (2) analyzes the implications of its modified holding for the three affected claims.*fn7
B. Lack of Ambiguity in the Amended Agreement
1. Texas Law on Contract Ambiguity
Pursuant to Texas law,*fn8 the Court must interpret a contract by first looking to "the objective intent of the parties as expressed by the plain language of the writing -- the so-called four corners rule -- in the light of 'attending circumstances.'" Corley v. Entergy Corp., 246 F. Supp. 2d 565, 573 (E.D. Tex. 2003). The "court is bound to read all parts of a contract together to ascertain the agreement of the parties." Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994). If a contract is unambiguous, parol evidence is inadmissible either to contradict or vary the express terms of the agreement. See Bio-Med. Applications of Texas, Inc. v. BAP-FMC San Antonio, Ltd., No. Civ.A. SA03CA1302FBN, 2005 WL 2177167, at *4 (W.D. Tex. Aug. 31, 2005). "A [contract] term is not ambiguous because of a simple lack of clarity. . . . An ambiguity arises only after the application of established rules of construction leaves an agreement susceptible to more than one meaning. Further, for an ambiguity to exist, both potential meanings must be reasonable." DeWitt County Elec. Co-op., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999).
2. Analysis of Amended Agreement
The Amended Agreement grants BLV "the perpetual and exclusive right to use, and to license or authorize others to use," the Mantle Indicia for (1) "purposes of advertising, publicizing, promoting, and otherwise exploiting the Picture and the production, distribution and exploitation thereof . . . .", and (2) "engaging in the merchandising and commercial tie-ups of products and services of all kinds relating to the Picture . . . ." Amendment ¶ 1. However, the Amended Agreement grants these rights with the proviso that "in connection with any such use [of the Mantle Indicia] it shall refer only to the Picture or to Mantle's services furnished hereunder which shall not depict Mantle as using or endorsing any product, commodity, or service, other than the Picture itself, without Mantle's further agreement." Amendment ¶ 1. The Amended Agreement provides one non-exclusive example of a permitted "exploitation of Mantle's name or likeness": "the merchandising of clothing bearing the logo of the Picture and Mantle's likeness." Amendment ¶ 2.2.
Because the Website uses the Mantle Indicia, Defendants must abide by the Amended Agreement's terms.*fn9 The Amended Agreement unambiguously requires that the Mantle Indicia be used only in reference to the Picture, and specifically prohibits using the Mantle Indicia for endorsing anything but the Picture itself. The Court concludes that the following alleged website activities are not authorized by the Amended Agreement: (1) Defendants' manufacture and sale of merchandise that uses the Mantle Indicia without referencing the Picture's title or logo; (2) Defendants' sale through the Website of merchandise, produced by other manufacturers, which uses the Mantle Indicia without referencing the Picture's title or logo (the "third-party merchandise"), and links through the Website to products and services that have no relation to the Picture; (3) the Website's failure to directly reference the Picture on approximately fifty percent of its pages; and (4) the Website's self-description as "The Official Mickey Mantle Website" and "The Official Licensed Web Site and Catalogue."*fn10
First, the Amended Agreement does not authorize Defendants to manufacture and sell merchandise that uses the Mantle Indicia without referencing the Picture's title or logo. The Amended Agreement states that Defendants may use the Mantle Indicia for merchandising the Picture, provided that "it shall refer only to the Picture." Amendment ¶ 1. The Court must interpret the term "refer" according to its "plain, ordinary, and generally accepted meanings." Nichols v. Enterasys Networks, Inc., 495 F.3d 185, 190 (5th Cir. 2007). In this context, the ordinary meaning of refer is "to make mention or reference" to. See American Heritage Dictionary, 4th Ed.; see also Gary Pools, Inc. v. McCaffety, No. 03-99-00390-cv, 2000 WL 298279, at *1 (Tex. App. Mar. 23, 2000) (citing a dictionary definition for the "plain meaning" of a word). The Court therefore concludes that any merchandise produced by Defendants must have some explicit reference to the Picture, using either its title or logo. This interpretation is reinforced by the one example of merchandise that is explicitly allowed in the Amended Agreement itself: "the merchandising of clothing bearing the logo of the Picture and Mantle's likeness." See Amendment ¶ 2.2. Read as a whole, the Amended Agreement clearly indicates that merchandise made and sold by Defendants must explicitly reference the Picture.
Second, the Amended Agreement does not authorize Defendants to sell third-party merchandise on the Website or link to other products and services that do not explicitly refer to the Picture. The Website makes extensive use of the Mantle Indicia and explicitly states that it is "licensed" by Mr. Mantle. Accordingly, its contents must "refer only" to the Picture, and "shall not depict Mantle as using or endorsing any product, commodity, or service, other than the Picture itself, without Mantle's further ...