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stating that the existence of the merger clause in the parties' contract precluded enforcement of the parties' alleged oral agreement
Summary of this case from PNC Bank v. Branch Banking & Trust Co.Opinion
Case No. 01-4856-CIV-MOORE.
January 23, 2002
Jack E. Dominick, Esq., Counsel for Plaintiff.
John C. Malloy, Jr., Esq., Counsel for Defendant CRT.
Gary M. Carman, Esq., Counsel for Defendant Laken.
ORDER
THIS CAUSE came before the Court upon Plaintiff Comsof, Inc.'s Motion for Preliminary Injunction (filed November 15, 2001). An evidentiary hearing on Plaintiff's Motion for Preliminary injunction was held before the undersigned on January 18, 2002, and the attorneys for all parties were present and were heard.
UPON CONSIDERATION of the Motion and the memoranda filed in support and in opposition, in addition to the evidence and arguments presented at the hearing, and being otherwise fully advised in the premises, the Court enters the following Order DENYING Plaintiff's Motion for Preliminary Injunction.
A. Background
Plaintiff in this action is Comsof, Inc. ("Comsof"), a Netherland Antilles corporation and a licensee of the Cigarette Racing Team trademark. Defendants are Cigarette Racing Team, Inc. ("CRT"), a Florida corporation engaged in the manufacture of Cigarette racing boats, and Glenn Laken, an officer and shareholder of CRT.
The parties' dispute is essentially two-fold. First, the parties vigorously contest the scope of Comsof's trademark license. Comsof maintains that scope of the license has been expanded beyond the express terms of the written contract by various oral and written agreements, made both before and after the written contract was signed. Defendants, on the other hand, posit that the license is limited to the express terms of the written contract between the parties. Second, the parties contest whether each has fulfilled the various promises, agreements, and contracts made during the course of their business relationship.
Notably, Plaintiff's Motion for Preliminary Injunction pertains directly only to the parties' disagreement over the scope of Comsofs license agreement. Comsofs claims regarding CRT's failure to provide promised services and support are peripheral to the preliminary injunction dispute.
In its Complaint, Comsof brought claims against Defendant CRT for Violation of Florida Franchise Act (Count I); Promissory Estoppel (Count II); Breach of Contract (Count III); Rescission and Restitution (Count IV); and Contract Reformation (Count V). Against Defendant Laken, Comsof brought a claim for Tortious Interference with Business and Contractual Relationship (Count VI). In addition, Comsof has moved for a preliminary injunction enjoining both CRT and Laken from "further selling, licensing, or otherwise offering for consideration the use of the trademark Cigarette Racing Team, any emblem or symbol designating to consumers that the source of a good is Cigarette Racing Team." See Plaintiffs Proposed Preliminary Injunction Order (filed November 30, 2001).
B. Discussion
In order to obtain the preliminary injunction it seeks, Comsof must show that (1) there is a substantial likelihood that it will ultimately prevail on the merits; (2) there is a substantial threat of irreparable harm to it if the injunction is not issued; (3) the threatened harm to it outweighs the threatened harm to the defendants from issuance of the injunction; and (4) the granting of a preliminary injunction will serve the public interest. See McDonald Corp. v. Robertson, 147 F.3d 1301, 1306 (11th Cir. 1998). With respect tot his burden, the Eleventh Circuit has observed that, in "this Circuit, a preliminary injunction is an extraordinary and drastic remedy not to be granted unless the movant clearly established the burden of persuasion as to the four requisites." Id. at 1306 (citations omitted).
However, Comsof has utterly failed to produce any evidence capable of showing that it is entitled to a "worldwide" trademark injunction for all types of products, and therefore has failed to satisfy its burden of persuasion on the first requisite — likelihood of success on the merits. While Comsof, in its motion and at the hearing, vaguely references oral and written agreements about the creation of a "worldwide partnership," these agreements were not relayed to the Court with sufficient specificity as to who made them, when they were made, or what the agreements covered. The testimony of Comsof's one witness, Mr. Tom De Geetere, was directed primarily at establishing CRT's failure to provide promised support and services, and at Comsof' s desire to expand into a worldwide market, rather than at explaining the source of Comsof's claimed right to a worldwide, all-product trademark license.
More importantly, even if the alleged "oral and written agreements" had been presented to the Court in more detail, it appears that they are unenforceable for several reasons. First, these agreements are likely negated by a written contract signed by the parties on August 5, 1999, which contains a merger clause. Second, enforcement of the oral agreements is likely barred by the statute of frauds, because the agreements cannot be performed within one year. Each issue will be addressed in turn.
The written contract entered by the parties was filed by CRT in response to Plaintiff's Motion for Preliminary Injunction. The contract is dated August 5, 1999, and is signed by agents for both Comsof and CRT. It specifies that the licensed products are "[a]ll apparel and other wearable items such as, but not limited to, screen-print t-shirts, sweat shirts, tank tops. jackets, hats, sucks, golf shorts, denim shirts, pants, skirts, and blouses," and that the licensed territory is Europe and Lebanon. See Defendant's Response in Opposition to Plaintiff's Motion for Preliminary Injunction, Ex. 1 (filed December 28, 2001). The contract further contains a section entitled "Entire Agreement," which provides:
The undersigned acknowledge that they, and each of the them, have read this Agreement in full; are cognizant of each and every one of the terms and provisions hereof and are agreeable thereto; that no representations or agreements, whether oral or written, except as hereinafter set forth, have been made or relied upon; that any and all prior agreements or understandings between the Parties, whether oral or written are automatically canceled by the execution of this Agreement; and the undersigned hereby release each other and their agents and employees, respectively, from any all claims, demands. agreements and liabilities of any description whatsoever, which the undersigned ever had, now has or hereafter may have, against any of the foregoing by reason of any matter, cause or thing occurring prior to the date of this Agreement; that the signatures affixed hereto were affixed as the wholly voluntary act of the persons who signed this Agreement; and that the terms and provisions of this Agreement cannot be changed or modified unless in writing signed by an authorized corporate officer of Licensee and Licensor.See id. at Ex. 1, ¶ 26 (emphasis supplied).
This is a classic merger clause, and precludes Comsof from enforcing extraneous oral and written agreements. See Barnes v. Burger King Corp., 932 F. Supp. 1420, 1427-29 (S.D. Fla. 1996) (noting that, "even absent a merger clause such as that contained in the Franchise Agreement, it is a basic tenet of contract law that reliance on representations by a contracting party in a suit based on the contract is unreasonable where the representations are not contained in the subsequent written agreement between the parties"); Shubot v. McDonald's Corp., 757 F. Supp. 1351, 1355-56 (S.D. Fla. 1990) (noting that "[c]lauses releasing parties and disclaiming liabilities overcome any oral representations not contained in the written . . . agreement"). Plaintiff has presented no evidence that convinces the Court, for the purposes of the Motion for Preliminary Injunction, that this written contract and merger clause should be rescinded, reformed, or otherwise rewritten to include the trademark entitlements claimed by Comsof.
Furthermore, the oral agreements alleged by Comsof are likely unenforceable under the statute of frauds. Florida's statute of frauds provides that "any agreement that is not to be performed within the space of 1 year from the making thereof . . . shall be in writing and signed by the party to be charged therewith." Fla. Stat. § 725.01 (2001). In this case, the written license agreement was for a period of ten years. Therefore, under the statute of frauds, it cannot be modified by subsequent oral agreements. in addition, with respect to previous oral agreements, Comsof has not shown that they would be performed within one year. Consequently, Plaintiff will likely be foreclosed from relying on the alleged oral agreements by Florida's statute of frauds.
In conclusion, Comsof has not shown a likelihood of success on the merits. The written license agreement between the parties grants Comsof a trademark license significantly narrower than the license to which Comsof claims to be entitled. Moreover, the oral and written agreements that Comsof claims establish its right to a "worldwide" license, are likely unenforceable under the 1999 license agreement's merger clause and Florida's statute of frauds. Therefore, Plaintiff is not entitled to the preliminary injunction requested.
C. Conclusion
Accordingly, based on the foregoing, it is
ORDERED AND ADJUDGED that Plaintiff Comsof, Inc.'s Motion for Preliminary Injunction (filed November 15, 2001) is DENIED with prejudice.
DONE AND ORDERED in Chambers at Miami, Florida, this 23 day of January, 2002.
K. MICHAEL MOORE UNITED STATES DISTRICT JUDGE