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Icebox-Scoops, Inc. v. Finanz St. Honoré

November 16, 2009


The opinion of the court was delivered by: Gershon, United States District Judge


Plaintiff Icebox-Scoops, Inc. brings this action under the court's diversity jurisdiction against defendants Finanz St. Honoré, B.V. ("Finanz") and Dana Classic Fragrances, Inc. ("Dana") (together "defendants") alleging that Finanz breached a licensing agreement between plaintiff and Finanz, and that both defendants committed various torts. Defendants move for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. For the reasons stated below, both defendants' motions are granted in part and denied in part.


The following facts are alleged in the complaint and its incorporated documents and are taken as true for purposes of this motion. Because both defendants have answered, their admissions are noted where pertinent.

Plaintiff Icebox-Scoops, Inc. ("Icebox-Scoops") is a New York corporation with its principal place of business at 2126 East 7th Street in Brooklyn, New York. (Complaint ("Compl.") ¶ 5.) As of April 12, 2008, plaintiff has registered the corporate name "Icebox, Inc." ("Icebox") in Pennsylvania as a "fictitious name" for Icebox-Scoops, Inc. (Sack Decl. Exs. A, B.) The Pennsylvania corporate registration lists the same contact information for both Icebox, Inc. and Icebox-Scoops, Inc., and is signed by Isaac Gindi, the president of Icebox-Scoops, Inc. (Id.)

Among other things, plaintiff sells cosmetics and bath and body products. (Compl. ¶ 5.) At all times relevant to the complaint, Finanz, a Netherlands-based corporation, owned the registered trademark TINKERBELL(r) under International Class 3, covering, inter alia, fragrances, cosmetics, and bath and body products. (Compl. ¶ 6). Dana, an "affiliate" of Finanz, is a Delaware corporation with a place of business in Mountaintop, Pennsylvania. (Compl. ¶ 7.) Plaintiff alleges that Dana and Finanz are related-even interchangeable-companies and have actual and apparent authority to act for each other. (Compl. ¶ 7.)

In March 2005, Icebox and Finanz executed a licensing agreement ("the Agreement" or "the License"),*fn1 in which Finanz exclusively licensed the TINKERBELL(r) trademark*fn2 to Icebox for two years. The License granted Icebox the exclusive right to use, import, manufacture, distribute, offer for sale, and sell TINKERBELL(r) products in the licensed territory, which the Agreement defined as worldwide. (Agreement ("Agmt.") ¶ 2.1.) The Agreement included a possible extension at Icebox's election for three more years so long as Icebox had met the minimum sales requirements contained in the Agreement for the preceding year. (Compl. ¶¶ 10-11; Agmt. ¶¶ 2.1, 8.) In recognition of the time required to get new products to market, the Agreement did not require Icebox to make a profit during the first year of the License, but did require net sales of at least $1,250,000.00 in the second year.*fn3 (Agmt. ¶ 8.1.) The Agreement required that Icebox pay Finanz a royalty of six percent of net sales. (Agmt. ¶ 9.1.) In addition to the sales, the Agreement required Icebox to submit its first batch production to Finanz for approval, and to report its gross sales for each three-month period within thirty days of the period's end. (Agmt. ¶¶ 4.1, 4.2.) If Icebox did not meet its obligations under the Agreement and failed to remedy its violations within sixty days of receiving written notice thereof, Finanz could terminate the License. (Agmt. ¶ 7.1.)

The Agreement contained a choice of law section, providing that "interpretation, performance, operation, rights and remedies relating to, and the legal effect of this Agreement, including its termination or cancellation, shall be construed pursuant to and governed by the laws of the State of Pennsylvania and the United States of America, without reference to conflicts of laws principles." (Agmt. ¶ 16.3.) In addition, the License featured a clause requiring all alterations, modifications, or waivers to be in writing, and a "merger clause," providing that: other than those representations and warranties contained in this Agreement, the parties have not relied upon any representation of fact or law related to the Products or any other factual or legal matter related to or referred to in this Agreement, and that the parties are not bound by any representations, rights or obligations not specifically contained in this Agreement. (Agmt. ¶¶ 16.2, 17.2.)

Dana is not a party to the Agreement, which was signed only by Isaac Gindi for Icebox and Alfred R. Cowger, Jr. for Finanz. However, Dana was responsible for administering the agreement (Compl. ¶ 8), and was designated as the recipient of any notices regarding the License and of any monies resulting from the distribution of products pursuant to the License. (Agmt. ¶ 16.7.) All notices sent to the licensor (Finanz) were to be addressed to Finanz in care of Dana at Dana's Mountaintop, Pennsylvania address. (Id.)

During negotiations before the Agreement was executed Icebox expressed concerns regarding the ownership of the TINKERBELL(r) trademark. (Compl. ¶¶ 12-14.) Icebox again raised its concerns after the Agreement's execution. (Id.) In response to Icebox's inquiries, defendants represented that (1) Finanz owned the relevant trademark; (2) Finanz had the right to grant the License to Icebox; (3) no litigation or other action was threatened or pending involving the TINKERBELL(r) trademark; (4) to the best of defendants' knowledge, the trademark did not infringe the rights of any other third party, including Disney and its affiliates; and (5) defendants "would maintain the rights being licensed in good standing and in force." (Compl. ¶ 12; Agmt. ¶ 17.1.) Defendants also assured plaintiff during negotiations and after the execution of the Agreement that they would "stand by their trademark rights, and would not allow Disney, or anyone else, to interfere with, or impede Icebox's sales of TINKERBELL(r) products." (Compl. ¶ 13.) Defendants further represented to plaintiff that they would not terminate the Agreement "even if they decided to sell the assets or stock of Finanz." (Compl. ¶ 17.)

In addition, when, after the execution of the Agreement, plaintiff expressed concerns regarding defendants' ownership and protection of the trademark, defendants responded in a letter signed by "managing director" Cowger on letterhead bearing the names of and contact information of both Finanz and Dana ("Cowger letter").*fn4 (Compl. Ex. B.) The letter characterizes Finanz as an "affiliate" of Dana and references both Finanz's ownership of the mark and Dana's past and future control of litigation over the mark. (Id.) In the letter, defendants acknowledge that plaintiff had "received a number of queries from retailers" about the License, specifically about Disney's ownership of the trademark. (Id.) Defendants provide a brief background of the TINKERBELL(r) trademark, which defendants acquired from a corporation Cowger calls Tinkerbell, Inc. (Id.) Cowger discusses the history of disputes between Disney and the various owners of the trademark over the "use of 'Tinkerbell' as a brand name around the world," and states that Disney never "negated" the trademark rights of Finanz's predecessor. (Id.) Defendants' letter affirms that the most recent litigation over the Tinkerbell trademark was resolved by a settlement agreement in 2002, in which Disney agreed "never again to try to use 'Tinkerbell' as a trademark for any children's product in International Class 3." (Id.) The letter confirms that Tinkerbell, Inc., "and now Dana," have trademarked TINKERBELL(r) in categories other than International Class 3 that were "natural. extensions." (Id.)

In the letter's final paragraph, defendants again assure plaintiff of their intentions regarding the trademark. Cowger states:

As I told you during licensing negotiations, the Dana organization is ready to stand by its trademark rights. Thus, if you learn at any time that Disney or any other organization is. claiming that Disney has superior rights over us or can impede your sale of Tinkerbell goods permitted under our license, please let me know immediately. We sued Disney in 2000 and are perfectly capable and willing to do it again if necessary. (Id.)

Plaintiff alleges that the representations made in the letter, and orally during negotiations prior to the execution of the Agreement, "were made for the specific purpose of inducing [p]laintiff to enter into the Licensing Agreement, and to perform and continue to perform thereunder," (Compl. ¶ 16), and that the representations were false when they were made. (Compl. ¶ 45.) Plaintiff relied on defendants' representations by, among other things, entering into the Agreement, developing products to be sold pursuant to the Agreement, and offering these products for sale. (Compl. ¶ 46.)

Defendants admit that in mid to late 2005, they entered into negotiations with Disney. (Compl. ¶ 20; Finanz Ans. ¶ 20; Dana Ans. ¶ 20.) Plaintiff alleges that these negotiations were "for the purpose of selling to Disney the trademark rights" that were the subject of the Agreement "in contravention of the affirmative representations made" by defendants. (Compl. ¶ 20.) Defendants also admit that they reached agreement with Disney in 2006, transferring to Disney their "rights in the trademark TINKERBELL(r) in International Class 3." (Finanz Ans. ¶ 64; Dana Ans. ¶ 20.) Plaintiff alleges that defendants benefitted from plaintiff's "efforts to commercialize the mark" in that plaintiff "added value" to the trademark, "allow[ing] [d]efendants to realize a greater price from their sale of the mark to Disney than they otherwise would have." (Compl. ¶¶ 59-60.)

On or about October 31, 2005, about seven months after the Agreement was executed, defendants informed plaintiff on letterhead from both defendants that they were terminating the Agreement effective immediately. (Compl. ¶ 24.) Defendants' stated reasons for termination included plaintiff's failure to provide samples of products it had sold, plaintiff's failure to adequately distribute products under the License, and plaintiff's failure to provide sales and advertising reports as required by the Agreement.*fn5 Plaintiff had not received notice of any alleged breach, despite an express provision in the Agreement requiring sixty days' notice for an opportunity to cure any alleged breaches, and alleges that it had fully complied with its obligations under the Agreement. (Compl. ¶¶ 26-27.)

Plaintiff's counsel responded by letter on November 3, 2005, and, having received no response, again on March 13, 2006, stating that the termination was improper and that defendants were acting in bad faith, and demanding that defendants cure their breach. (Compl. ¶¶ 30-32.) Defendants at no time have taken action in response to plaintiff's letters. (Compl. ¶ 33; Finanz. Ans. ¶ 33.)

On February 8, 2007, plaintiff commenced this action, alleging: (1) breach of contract; (2) breach of express warranty; (3) fraud in the inducement and subsequent to the execution of the Agreement; (4) negligent misrepresentation; (5) unjust enrichment; (6) equitable estoppel; and (7) promissory estoppel. Plaintiff appeared to allege all seven claims against both defendants, although plaintiff's memorandum of law in opposition to the instant motion states that the breach of contract and breach of warranty claims are not asserted against Dana "because Dana is not a signatory to the contract." (Pl.'s Mem. of Law 2.) Plaintiff seeks injunctive relief, compensatory damages of not less than $5 million, and $15 million in punitive damages. (Compl. ¶¶ 36, 40, 47, 49, 54, 56, 62.)

Defendants now bring motions for judgment on the pleadings. Dana seeks dismissal of all claims against it, or, in the alternative, dismissal of all claims except for the claim alleging equitable estoppel. Finanz seeks dismissal of the entire complaint based on standing, or in the alternative, dismissal of plaintiff's fraud, negligent misrepresentation, unjust enrichment, and estoppel claims. Finanz also asks the court to strike plaintiff's request for injunctive relief.


a. Legal ...

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