United States District Court, E.D. North Carolina, Northern Division
TERRENCE W. BOYLE UNITED STATES DISTRICT JUDGES
cause comes before the Court for consideration of defendant
Shepard Morrow's motion for summary judgment pursuant to
Rule 56 of the Federal Rules of Civil Procedure. The
appropriate responses and replies have been filed and the
matter is ripe for ruling. For the reasons that follow,
Morrow's motion for summary judgment is GRANTED.
Court has recounted the procedural history and factual
background of this web of litigation involving the rights to
the WINGS trademark in numerous previous orders. [DE 183;
211; 220; 233; 301 - 303]. The relevant facts for
consideration of the instant motion are as follows. In May
1992, Morrow acquired five federal trademark registrations
for the name WINGS. [DE 328-4] Morrow Decl. ¶¶ 4-6.
In April 1993, Morrow and L&L Wings entered into an
agreement regarding a license to use the WINGS mark (the
Morrow Agreement), naming Morrow as the licensor and L&L
Wings as the licensee. [DE 342-2]. Under the terms of the
Morrow Agreement, L&L Wings agreed to pay Morrow a
royalty totaling $100, 000 payable in ten equal annual
installments, together with interest on the unpaid balance at
the rate of 10% per year. Id. § 2. The
royalties provision further states that if the Morrow
Agreement has not been terminated within ten years from its
execution pursuant to section eight and the WINGS mark has
not been assigned to L&L Wings pursuant to section nine,
then the license granted would become royalty free and
L&L Wings would have no further obligation to make
royalty payments; section eight provides that the licensor
may terminate the agreement at any time for failure to make a
royalty payment and section nine relates to the
licensee's sublicensing of the mark under certain
conditions and states that the duties of the licensor are
freely assignable upon written notice to the licensee.
Id. §§ 2, 8, 9.
Morrow Agreement further provides in section seven that if
the licensor is not using the mark ten years after the date
of the agreement and the licensee is the sole user of the
mark, the licensee shall assign to licensee all right, title,
and interest in the mark upon full payment and in
consideration of the royalty. Id. § 7.
Wings made the initial royalty payment of $10, 000 and failed
to make any payments thereafter. On December 31, 2013, Morrow
assigned to Super Wings his right, title, and interest in the
Morrow Agreement. [DE 342-3]. Such assignment was later
rescinded, and Morrow assigned his right, title, and interest
in the Morrow Agreement to Beach Mart. [DE 342-4; 342-5]. On
April 18, 2014, Morrow notified L&L Wings that Morrow
would assign all of his rights and duties under the Morrow
Agreement to Beach Mart. [DE 305] Second Amd. Compl. ¶
only claims which remain against Morrow in L&L Wings'
action are counts I and II of the second amended complaint,
which allege claims for breach of contract and breach of the
implied covenant of good faith and fair dealing. [DE 305].
The parties do not dispute that the Morrow Agreement is to be
construed under New York law.
motion for summary judgment may not be granted unless there
are no genuine issues of material fact for trial and the
movant is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a). The moving party bears the initial burden
of demonstrating the absence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). If that burden has been met, the non-moving party
must then come forward and establish the specific material
facts in dispute to survive summary judgment. Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
588 (1986). In determining whether a genuine issue of
material fact exists for trial, a trial court views the
evidence and the inferences in the light most favorable to
the nonmoving party. Scott v. Harris, 550 U.S. 372,
378 (2007). However, "[t]he mere existence of a
scintilla of evidence" in support of the nonmoving
party's position is not sufficient to defeat a motion for
summary judgment. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 252 (1986). "A dispute is genuine if a
reasonable jury could return a verdict for the nonmoving
party. . . . and [a] fact is material if it might affect the
outcome of the suit under the governing law."
Libertarian Party of Virginia v. Judd, 718 F.3d-308,
313 (4th Cir. 2013) (internal quotations and citations
omitted). Speculative or conclusory allegations will not
suffice. Thompson v. Potomac Elec. Power Co. , 312
F.3d 645, 649 (4th Cir. 2002).
Breach of contract.
Wings alleges that Morrow breached the Morrow Agreement, to
the extent there was a valid agreement, by failing to assign
all right, title and, interest to the WINGS trademark to
L&L i Wings, and by entering into agreements assigning
his rights under the Morrow Agreement first to Super Wings
and then to Beach Mart without giving L&L Wings written
notice of these assignments. [DE 305] Second Amd. Compl.
(SAC) ¶¶ 56, 55. In order to establish breach of
contract under New York law, "a plaintiff must prove, by
a preponderance of the evidence, (1) the existence of a
contract between itself and that defendant; (2) performance
of the plaintiffs obligations under the contract; (3) breach
of the contract by that defendant; and (4) damages to the
plaintiff caused by that defendant's breach."
Diesel Props S.r.l. v. Greystone Bus. Credit IILLC,
631 F.3d 42, 52 (2d Cir. 2011).
Wings takes the position in this litigation that "the
Morrow Agreement was null and void from its inception, or
else terminated in accordance with its terms." [DE 305]
SAC ¶ 2. L&L Wings further alleges that if "the
Morrow Agreement is valid and existing, Morrow has breached
his obligations thereunder, " by failing to assign all
right title and interest in the WINGS mark to L&L as
required by paragraph seven of the agreement. Id.
¶ 2, 54.
to the extent that L&L Wings contends that the Morrow
Agreement is null and void from inception, it cannot state a
claim for breach of contract. Second, insofar as L&L
Wings contends that Morrow violated the terms of section
seven of the Morrow Agreement, the plain language of
paragraph seven conditions assignment of the trademark from
the licensor to the licensee on, inter alia,
"full payment of and in consideration of the
Royalty." [DE 281-35] § 7. There is no dispute in
the record that L&L Wings failed to make any royalty or
interest payment after the first payment of $10, 000.
See [DE 328-4] Levy, A. (30(b)(6)) Dep. at 96.
Specifically, L&L Wings testified that it failed to pay
Morrow any of the royalties that it owed under the Morrow
Agreement after the first payment because it was "no
longer convenient for us to do so." Id. at 97.
Shaul Levy, president of L&L Wings, further testified
that it L&L Wings did not make any further royalty
payments because it was a mistake to enter into the Morrow
Agreement as it was not necessary. [DE 328-4] Levy, S. Dep.
at 159-160. In opposition to the instant motion, L&L
Wings relies on an April 21, 2014, letter written to counsel
for Morrow which purports to express its willingness to pay
the royalty in a demand that Morrow comply with his
obligations under section seven of the Morrow Agreement, [DE
342-6] at 2-3, to contend that it could still pay the royalty
which would trigger Morrow's duty to assign it the rights
to the WINGS trademark. Such argument fails, as, first, the
letter does not express any intention to pay the royalty plus
interest as required under the Morrow Agreement and, second,
it was tendered after Morrow notified L&L Wings of his
assignment of his rights under the Morrow Agreement to Beach
Mart. [DE 342-5].
L&L Wings cannot demonstrate that it performed its
obligations under the contract, or that a necessary condition
to assignment, payment of the full royalty plus interest, has
occurred, and summary judgment in ...