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Prince of Peace Enterprises, Inc v. Top Quality Food Market

January 14, 2011

PRINCE OF PEACE ENTERPRISES, INC., PLAINTIFF,
v.
TOP QUALITY FOOD MARKET, LLC, ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Richard J. Holwell, District Judge

MEMORANDUM OPINION

Two matters in this case are currently pending before the Court.

First is defendants A & C Supermarket, Inc. ("A&C"), Tu Chin Lin, Xuiyan Huang, and Yinghai Shi's (collectively the "A&C defendants") motion to dismiss plaintiff Prince of Peace Enterprises, Inc.'s ("POP") first amended complaint ("FAC") pursuant to Federal Rule of Civil Procedure 12(b)(6); as well as to compel a return of all goods seized by POP; and in support of the A&C defendants' counterclaim for damages as a result of that seizure pursuant to Section 34(d)(11) of the Lanham Act. The A&C defendants argue that POP lacks standing to sue on all of its claims, that additionally POP fails to establish the likelihood of confusion element of its false designation and description claims, and that the A&C defendants lost sales as a result of POP's seizure and publication of that event. The motion, filed on May 1, 2007, is not opposed by POP.*fn1

Because POP alleges neither that it was the registrant, owner, or legal assignee of the trademarks in question, nor that the goods were materially different from POP's goods sold in the United States, the Court GRANTS the A&C defendants' motion to dismiss POP's complaint in its entirety. The Court also orders POP to release to the A&C defendants any goods seized from them. Finally, the Court refers this matter to Magistrate Judge Frank Maas to perform an inquest to determine the appropriate award of damages the A&C defendants incurred due to POP's seizure plus a reasonable attorney's fee, in any.

Second is POP's motion to enforce its settlement agreement with defendant/counterclaimant Madison One Acme Inc., d/b/a Solstice Medicine Co. ("Solstice"). POP contends that Solstice breached an agreement settling all claims between POP and Solstice by engaging in selling activity and obtaining distributorship rights regarding Po Chai Pills ("PCP") in violation of certain timing terms in that agreement. Solstice contends that POP misreads the settlement agreement, that no enforceable agreement existed in the first place, and that POP cannot make out a claim for damages. Because the purported settlement agreement contains ambiguous and contradictory terms, of which the parties have contradictory but reasonable interpretations, the Court finds that the parties never came to any meeting of the minds and that therefore the settlement is unenforceable. The Court thus DENIES POP's motion to enforce its settlement.

I. BACKGROUND

A. Factual and Procedural Setting

POP brought this action on January 16, 2007. The FAC, filed March 9, 2007,

states claims against, inter alia, the A&C defendants and Solstice for: (1) trademark infringement under Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1); (2) false designation of origin and false descriptions and representations under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (3) trademark dilution under Section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c); (4) trademark dilution under Section 360-l*fn2 of the New York General Business Law, N.Y. Gen. Bus. Law § 306-l; and (5) New York common law unfair competition. (FAC ¶¶ 47-67.) After denying the allegations in the complaint, Solstice commenced its own action against POP in federal court in California asserting several unfair competition claims of its own. (POP's Mem. in Support of POP's Mot. to Enforce Settlement ("POP's Enforcement Mem.") at 3.) That action was subsequently transferred to this district and consolidated with this action. (Id.)

As of 2004, POP was the "exclusive distributor" of PCP in the United States. (FAC ¶ 7; FAC Ex. B.) In or before January 2007, however, POP found products bearing a mark identical to that affixed to the bottles of their PCP being sold at various markets including at A&C. (Id. ¶ 32.) On January 17, 2007, the Court granted POP's application for an ex parte order for seizure of the allegedly infringing goods. (Id. ¶ 37.) POP executed that order and seized allegedly infringing products from A&C on January 28, 2010, and publicized the seizure in a Chinese language newspaper. (Lin Aff. ¶¶ 3, 10.)*fn3

B. Facts Relevant to the A&C Defendants' Motion to Dismiss and Counterclaim for Damages On February 16, 2007, the Court held a hearing to ascertain whether the facts that gave rise to the original issuance of the seizure order were still valid, and to consider the A&C defendants' claim for damages arising out of the allegedly wrongful seizure. Prince of Peace Enters., Inc. v. Top Quality Food Market, LLC, No. 07 Civ. 00349 (RJH), 2007 WL 704171, at *1 (S.D.N.Y. Mar. 7, 2007). The Court found that POP had not proven a likelihood of success on the merits for its claims against the A&C defendants, and vacated the seizure order as to them. Id. at *6. The Court also found that the A&C defendants had not provided documentation supporting their damages claims but granted them leave to assert counterclaims for damages. Id. On April 20, 2007, the A&C defendants filed their answers to the FAC, and included a counterclaim under Section 34(d)(11) of the Lanham Act, 15 U.S.C. § 1116(d)(11), for damages incurred from a wrongful seizure. Then on May 1, 2007, the A&C defendants filed the present motion to dismiss the complaint and in support of their claim to damages.

In the FAC, POP claims to be the "exclusive distributor" of the PCP in the United States (FAC ¶ 7), and also the "assignee" of the trademarks "use[d] for many years on and in connection with" PCP (the "Marks").*fn4 (Id. ¶¶ 26, 28.) The assignment was allegedly created by an agreement between a company called Li Chung Shing Tong (S) Pte Ltd. ("LCST") and POP dated April 30, 2004. According to the agreement, "LCST [was] the owner of various Quinwood Limited U.S. registered Trademarks related to [PCP]." (FAC Ex. B.) Quinwood Limited LLC ("Quinwood") was the registrant of the trademarks in question. (FAC Ex. A at 3, 5, 8, 10, 12.) The agreement stated:

LCST grants POP the Sole and Exclusive use of various Quinwood Limited Trademarks owned by LCST related to [PCP] for the [United States] to take any and all actions against any and all parties, known and unknown, to the fullest extend [sic] of the laws of the [United States]. (FAC Ex. B.) The agreement also appointed POP the "Sole and Exclusive Authorized Distributor" of PCP in the United States, and tasked POP with promoting the sale and ensuring the quality of PCP. (Id.) Finally, the agreement would "remain valid until terminated by written notice to the Trademark Office of the [United States]." (Id.)

C. Facts Relevant to POP's Motion to Enforce the Settlement Agreement

On February 1, 2008, POP and Solstice executed a handwritten agreement (the "Settlement Agreement") on Hilton Hotel stationary purportedly settling the action and dismissing all claims as between POP and Solstice. (Seltzer Decl. Ex A ("Settlement Agreement"); Yeung Aff. ¶ 3; So Decl. ¶ 4.) The Settlement Agreement was signed by Kenneth Yeung, founder and president of POP, and Wina So, CEO of Solstice. (Settlement Agreement; Yeung Aff. ¶ 3; So Decl. ¶¶ 4, 13.) Relevant to this opinion, the agreement states:

2. Madison One not to sell PCP nor attempt to obtain distributorship from LCST for 6th 6th 6 months after termination of POP current or extended distributorship.

3. Madison One can sell after period termination of distributorship mentioned in ¶ 2. (Settlement Agreement ¶¶ 2, 3.) The parties do not disagree that the relevant "distributorship" ended June 30, 2009. (Yen Aff. ¶ 3; So Decl. ¶ 10.) Nor does Solstice refute POP's contention that it sold PCP between July and November, 2009, well within six months after the distributorship terminated. (Yen Aff. ¶¶ 5-11; see Solstice's Opp'n at 5-6.) Solstice also admits LCST offered and Solstice accepted a distributorship within the prohibited six-month period following termination of POP's distributorship, but contends that paragraph "3." of the Settlement Agreement prohibited Solstice merely from soliciting such an ...


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