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The Ananta Group v. Jones Apparel Group, Inc.

United States District Court, S.D. New York
Jun 11, 2001
01 CIV. 674 (DLC) (S.D.N.Y. Jun. 11, 2001)

Opinion

01 CIV. 674 (DLC)

June 11, 2001

Robert N. Chan, Robson Ferber Frost Chan Essner, LLP New York, N.Y. attorney for Plaintiff.

Victor M. Metsch, Hartman Craven LLP New York, N.Y. attorney for Defendants.


OPINION AND ORDER


In this diversity action, plaintiff, The Ananta Group, Ltd. ("Ananta"), asserts that defendants Jones Apparel Group, Inc. ("Apparel Group") and Jones Investment Co. ("Investment Co.") (collectively, "Jones") breached contractual promises to pay Ananta commissions on funds Jones received under the terms of its trademark licensing agreements with three companies. Plaintiff has moved for summary judgment. For the following reasons, plaintiff's motion for summary judgment is granted in its entirety.

BACKGROUND

The following facts are undisputed, unless otherwise noted. Plaintiff Ananta is a broker involved in the licensing of trademarks. Until the end of 1985, Ananta was known as The What Have You Done For Me Lately, Company, Inc. Peter Wiederhorn ("Wiederhorn"), an attorney, is the president of Ananta.

Ananta is a New York corporation with its principal place of business in New York.

Apparel Group is a designer, manufacturer, and marketer of apparel. Part of Apparel Group's business consists of marketing products under the brand names and trademarks "Jones New York" and "JNY," and licensing the use of the "Jones New York" and "JNY" trademarks with various manufacturers. Investment Co. is a wholly owned subsidiary of Jones Apparel. Sidney Kimmel ("Kimmel") is the Chairman of the Board of Directors of Jones Apparel and Investment Co.

Apparel Group is a Pennsylvania corporation that has its principal office in Pennsylvania and does business in New York.

Investment Co. is a Delaware corporation with its principal place of business in Delaware.

At issue in this litigation are a series of agreements which the plaintiff claims entitles it to fifteen percent of the money Jones receives from Marcraft Clothes, Inc. ("Marcraft"), Gloria Gay Coats, Inc. ("Gloria Gay"), and the alleged successor to Gloria Gay, G-III Leather Fashions ("G-III"). Since this dispute turns on the language in these agreements, the pertinent provisions are quoted below.

Marcraft Agreement and License

In 1985, the What Have You Done For Me Lately, Co., Inc. introduced Jones to Marcraft. On May 2, 1985, The What Have You Done For Me Lately, Co., Inc. and Jones entered into an agreement (the "Marcraft Agreement") which provides, in relevant part, that:

In the event that Jones Apparel Group, Inc. enters into a license agreement or other arrangement with Marcraft Clothes, Inc. for the use of the Jones New York trademark [Ananta] shall be entitled to a commission of 15% of all sums received by [Jones] for the duration of such contract, including all renewals, extensions or new contract thereof.

(Emphasis supplied.)

On October 6, 1993, Jones and Marcraft entered into an agreement ("Marcraft Licensing Agreement") under which Jones gave Marcraft the license to use the "Jones New York" mark in connection with the manufacture and sale of men's clothing, and Marcraft agreed to pay Jones a percentage of the net sales of the licensed merchandise. The Marcraft Licensing Agreement also required that Marcraft promote Jones merchandise and, when defendants institute a national advertising campaign, contribute a percentage of its net sales to defendants' campaign.

The Marcraft Licensing Agreement was amended several times. In an October 1998 amendment, the percentage of Marcraft's net sales to be contributed to Jones' national advertising campaign was adjusted. Jones instituted a national advertising campaign in 1998, and Marcraft paid defendants $249,878 in 1998, and $331,716 in 1999, towards defendants' national advertising campaign. Defendants have not paid Ananta any commissions based upon these receipts.

Gloria Gay Agreement and Licensing Agreements

In 1988, Ananta introduced Jones to Gloria Gay. On September 22, 1998, Ananta and Jones entered into an agreement concerning Gloria Gay ("Gloria Gay Agreement"), which provides, in relevant part, that:

In the event that Jones Apparel Group, Inc. enters into a license agreement or other arrangement with Gloria Gay Coats, Inc. or affiliate for the use of the Jones New York trademark [Ananta] shall be entitled to a commission of 15% of all sums received by [Jones] for the duration of such contract, including all renewals, extensions or new contract thereof.

(Emphasis supplied.)

On December 6, 1991, Investment Co. and Gloria Gay entered into a licensing agreement ("Gloria Gay Licensing Agreement I") for the use of defendants' "Jones New York" trademark in connection with the manufacture of women's coats in exchange for five percent of the net sales of licensed merchandise, as well as certain minimum royalties. The Gloria Gay Licensing Agreement additionally provides that Gloria Gay shall contribute a percentage of its net sales to defendants' national advertising campaign. The Gloria Gay Licensing Agreement I was amended several times and was to remain in effect through December 31, 2002.

On January 1, 1994, Investment Co. and Gloria Gay entered into a second licensing agreement ("Gloria Gay Licensing Agreement II"), for the licensing of the "JNY" trademark in connection with the manufacture and sale of women's coats in exchange for five percent of the net sales of licensed merchandise, as well as certain minimum royalties. The Gloria Gay Licensing Agreement II additionally provides that Gloria Gay shall contribute a percentage of its net sales to defendants' national advertising campaign. The Gloria Gay Licensing Agreement II was renewed and was to remain in effect through December 31, 2002.

Gloria Gay has paid defendants $188,895 in 1998, and $191,869 in 1999, towards Jones' national advertising campaign. Defendants have paid no commissions to Ananta based upon these receipts.

Settlement Agreements

Ananta brought suit against Apparel Group in 1991, relating to a commission in connection with separate agreements involving a company called Bag Bazaar, Inc. ("Bag Bazaar"). In a 1992 settlement agreement resolving this action ("1992 Settlement Agreement"), the parties affirmed that Jones was not released from claims, contracts, and obligations

with respect to license agreements (including `renewals' thereof) between Jones as licensor and the following licensees — Marcraft Clothes, Inc. [and] Gloria Gay Coats . . . and their respective successors, assigns, transferees and affiliates, including, without limitation, the obligation to pay Ananta 15% of Jones' receipts with respect to such licensees.

(Emphasis supplied.) The 1992 Settlement Agreement additionally provides that "[i]n any litigation . . . to enforce any provision of this Settlement Agreement, the prevailing party shall receive its reasonable attorneys' fees and costs." (Emphasis supplied.)

Ananta's president, Wiederhorn, declared that he bargained for the language in the 1992 Settlement Agreement regarding the licensees' "successors, assigns, transferees and affiliates" and "was so concerned with obtaining this clarification (as well as the right to recover legal fees if plaintiff had to sue again) that in consideration for them, plaintiff agreed to reduce its commission on defendants' receipts from Bag Bazaar from 15% percent to 10%." Defendants do not dispute this contention.

In 1994, Ananta commenced a second action against Jones on the grounds that Jones failed to pay its commissions on royalties received from Gloria Gay in connection with Gloria Gay's use of the "Jones New York" label in conjunction with the "JNY" label. In 1995, the parties entered into a settlement agreement ("1995 Settlement Agreement"). The 1995 Settlement Agreement required Jones to pay Ananta a fifteen percent commission on payments from Gloria Gay "in connection with Gloria Gay's sales of merchandise bearing both the `Jones New York' and `JNY' trademarks on the same item," and is "binding upon and [shall] inure to the benefit of the parties, hereto, their officers, employees, affiliates, subsidiaries, successors and assigns and acquirers of their assets, whether by sale, or merger or consolidation." The 1995 Settlement Agreement additionally provides that it "shall not affect the [Gloria Gay Agreement], except that this Settlement Agreement shall control with respect to Gloria Gay's use of the `Jones New York' trademark in conjunction with the `JNY' trademark."

G-III Acquisition of Gloria Gay and Licensing Agreement

On January 10, 2001, G-III Leather Fashions ("G-III") acquired Gloria Gay. In an Asset Purchase Agreement and an accompanying Bill of Sale and Assignment, Gloria Gay agreed to transfer its assets to G-III, including its licenses for "JNY" and "Jones New York," its furniture and office supplies, its lease, its records and files, its insurance policies, its creative designs, its fabric and inventory, and all of the "goodwill and going concern value in the business and operations of" Gloria Gay. Additionally, on January 10, 2001, the principals of Gloria Gay agreed to serve as consultants for G-III.

In anticipation of the Asset Purchase Agreement and the Bill of Sale and Assignment, Jones and Gloria Gay agreed that Jones would terminate the Gloria Gay Licensing Agreements I and II on the condition that G-III would simultaneously enter into a separate licensing agreement with Jones. A letter agreement, dated January 4, 2001, and signed by Jones and Gloria Gay ("Jones/Gloria Gay Letter") provides, in relevant part that it:

will confirm our mutual agreement to terminate [Gloria Gay Licensing Agreements I and II] . . . in view of [Gloria Gay's] notification to Jones that Gloria Gay has entered into an agreement to be acquired by G-III. . . . We have agreed that Jones will exercise its right of termination immediately upon the closing of the Transaction, provided that G-III simultaneously enters into a written license agreement with Jones for use of the Marks for Articles in the same territory as covered by the [Gloria Gay Licensing Agreements I and II].

Pursuant to the terms of the Jones/Gloria Gay letter, on January 10, 2001, Jones and G-III entered into a licensing agreement ("G-III Licensing Agreement"). Under the G-III Licensing Agreement, G-III is required to pay a percentage of its net sales of licensed merchandise to Jones, and contribute a percentage of its net sales to Jones' national advertising campaign for each brand licensed by G-III. Jones has not paid Ananta a commission on any of the revenues that it has received from G-III.

In its complaint, Ananta asserts that defendants have breached the terms of their agreements with plaintiff. First, Ananta asserts that, pursuant to the Marcraft Agreement and the Gloria Gay Agreement, defendants are obligated to pay plaintiff commissions on all money received from Marcraft and Gloria Gay, including Marcraft's and Gloria Gay's payments towards Jones' national advertising campaign. Second, Ananta asserts that, pursuant to the Gloria Gay Agreement and the 1992 Settlement Agreement, it is entitled to fifteen percent of Jones' receipts from G-III, including G-III's payments towards Jones' national advertising campaign. Ananta seeks damages, a declaratory judgement establishing its entitlement to these commissions, and attorneys' fees.

DISCUSSION

Summary judgment may not be granted unless the submissions of the parties, taken together, "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The substantive law governing the case will identify those issues that are material, and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1987). The moving party bears the burden of demonstrating the absence of a material factual question, and in making this determination the Court must view all facts in the light most favorable to the nonmoving party. See Azrielli v. Cohen Law Offices, 21 F.3d 512, 517 (2d Cir. 1994). When the moving party has asserted facts showing that the nonmovant's claims cannot be sustained, the opposing party must "set forth specific facts showing that there is a genuine issue for trial," and cannot rest on the "mere allegations or denials" of his pleadings. Rule 56(e), Fed.R.Civ.P. See also Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995).

Generally, summary judgment is appropriate in a contractual dispute only when the language of the contract is "wholly unambiguous." Compagnie Financiere de CIC et de L'Union Europeenne v. Merrill Lynch, Pierce, Fenner Smith Inc., 232 F.3d 153, 157 (2d Cir. 2000). Contract language is unambiguous if it has "a definite and precise meaning, unattended by danger of misconception in the purport of the [contract] itself, and concerning which there is no reasonable basis for a difference in opinion." Seiden Assoc. Inc. v. ANC Holdings, Inc., 959 F.2d 425, 428 (2d Cir. 1992) (citation omitted) (brackets in original). "Contract language is ambiguous if it is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement." Sayers v. Rochester Tel. Corp. Supplemental Management Pension Plan, 7 F.3d 1091, 1095 (2d Cir. 1993) (citation omitted). Whether contract language is ambiguous is a question of law to be decided by the court. Compagnie Financiere, 232 F.3d at 157. Although ambiguous contractual language must usually be interpreted by a factfinder, a court can determine the meaning of ambiguous contract language as a matter of law "if there is no extrinsic evidence to support one party's interpretation of the ambiguous language or if the extrinsic evidence is so one sided that no reasonable factfinder could decide contrary to one party's interpretation." Id. at 159. A court can also determine the meaning of ambiguous contract language as a matter of law "when the language is ambiguous and there is relevant extrinsic evidence, but the extrinsic evidence creates no genuine issue of material fact." Id. at 158 (quoting Shepley v. New Coleman Holdings Inc., 174 F.3d 65, 72 n. 5 (2d Cir. 1999) (citation omitted)).

A. National Advertising Campaign Fund

The parties in this case dispute whether Jones is contractually obligated to pay Ananta fifteen percent of the money Jones receives from Marcraft and Gloria Gay to defray the cost of its national advertising campaign. The language in both the Marcraft and Gloria Gay Agreements and in the 1992 Settlement Agreement unambiguously require Jones to pay Ananta fifteen percent of all money that it receives from Marcraft and Gloria Gay. Both the Marcraft Agreement and the Gloria Gay Agreement provide that, if Jones "enters into a license agreement or other arrangement" with Marcraft or Gloria Gay, Ananta "shall be entitled to a commission of 15% of all sums received by [Jones]" (emphasis supplied). The 1992 Settlement Agreement additionally provides that Jones must pay Ananta "15% of Jones' receipts with respect to" its license agreements with Marcraft and Ananta (emphasis supplied). Marcraft and Gloria Gay paid Jones hundreds of thousands of dollars in 1998 and 1999 towards Jones' national advertising campaign. Ananta is, therefore, entitled to a fifteen percent commission on these payments.

Defendants have raised no disputed issue of material fact to preclude the entry of summary judgment for plaintiff on this claim. Jones asserts that Ananta is not entitled to a commission on the money paid by Marcraft and Gloria Gay towards Jones' national advertising campaign because these funds do not represent profits but, rather, "contributions" to defray Jones' expenses. The manner in which Jones accounts for or chooses to spend the money it receives from Marcraft and Gloria Gay is irrelevant, however, to Jones' obligations to Ananta under the terms of the Marcraft Agreement and the Gloria Gay Agreement. Jones additionally asserts that Kimmel, who signed the Marcraft Agreement and the Gloria Gay Agreement on behalf of Jones, was never told that "Ananta was or would be entitled to be paid a commission by Jones based upon contributions from licensees to the costs of national advertising programs." Defendants do not, however, assert that Kimmel ever made any inquiry or that Wiederhorn made any affirmative representations on the issue. Because the Marcraft Agreement and the Gloria Gay Agreement are unambiguous, and because, "[u]nder New York contract law, `[u]ncommunicated subjective intent alone cannot create an issue of fact where otherwise there is none,'" Property Asset Management, Inc. v. Chicago Title Ins. Co., Inc., 173 F.3d 84, 87 (2d Cir. 1999) (quoting Wells v. Shearson Lehman/American Exp., Inc., 72 N.Y.2d 11, 24 (1988)), neither Wiederhorn's nor Kimmel's uncommunicated intent regarding the scope of the Marcraft and Gloria Gay Agreements creates a disputed question of material fact that would prevent entry of summary judgment on plaintiff's claim. Accordingly, under the terms of the Marcraft Agreement and the Gloria Gay Agreement, Ananta is entitled to fifteen percent of all monies paid by Marcraft and Gloria Gay, including money required by Jones' national advertising campaign.

The parties have not addressed what law applies in this case, but they have applied New York law in their briefs and thereby have consented to its application here. See American Fuel Corp. v. Utah Energy Development Co., 122 F.3d 130, 134 (2d Cir. 1997). Although the Marcraft Agreement and the Gloria Gay Agreement do not include choice of law provisions, the 1992 and 1995 Settlement Agreements do provide that they "shall be governed by New York law in all respects." Therefore, New York law governs.

B. G-III Agreement

The parties additionally dispute whether Ananta is entitled to a fifteen percent commission on the revenues Jones receives from the G-III Licensing Agreement. Ananta asserts that it is entitled to a commission on these revenues, and relies on the 1992 Settlement Agreement, which provides that Jones has an obligation to pay Ananta fifteen percent of Jones' receipts from its licenses with Gloria Gay and from its licenses with Gloria Gay's "successors, assigns, transferees and affiliates." Ananta asserts that G-III is the successor to, assignee of, and transferee of Gloria Gay.

When interpreting the terms of an unambiguous contract under New York law, "[w]ords and phrases are given their plain meaning." Krumme v. WestPoint Stevens Inc., 238 F.3d 133, 139 (2d Cir. 2001) (citation omitted) (brackets in original). A successor is defined as "[a] corporation that, through amalgamation, consolidation, or other assumption of interests, is vested with the rights and duties of an earlier corporation." Black's Law Dictionary 1446 (7th ed. 1999). An assignment is defined as an agreement that "transfers the assignor's contract rights, leaving them in full force and effect as to the party charged." Ametex Fabrics, Inc. v. Just In Materials, Inc., 140 F.3d 101, 107 (2d Cir. 1998) (citation omitted). A transferee is defined as "[o]ne to whom a property interest is conveyed." Black's Law Dictionary at 1504.

While few cases describe what it means to be a successor, many cases describe the requirements for "successor liability." See, e.g, Nettis v. Levitt, 241 F.3d 186, 193 (2d Cir. 2001) ("[w]hen a successor firm acquires substantially all of the predecessor's assets and carries on substantially all of the predecessor's operations, the successor may be held to have assumed its predecessor's tort liabilities, notwithstanding the traditional rule that a purchaser of corporate assets does not assume the seller's liabilities"). The continuity of facilities, property, equipment, and contracts between Gloria Gay and G-III reflected in the terms of the Asset Purchase Agreement and the Bill of Sale and Assignment would be sufficient to establish successor liability.

The undisputed evidence in the record reflects that G-III is the successor to, assignee of, and transferee of Gloria Gay. Through the Asset Purchase Agreement and the Bill of Sale and Assignment, Gloria Gay's licenses, property rights, contract rights, and assets, as well as the "goodwill and going concern value in [its] business and operations" were transferred to and vested in G-III. The Jones/Gloria Gay Letter additionally reflects Jones' understanding that G-III was acquiring Gloria Gay. Defendants have raised no extrinsic evidence that suggests these provisions are ambiguous, nor have they raised any disputed issue of material fact that would preclude the entry of summary judgment for plaintiff on this claim. Accordingly, pursuant to the terms of the 1992 Settlement Agreement, Ananta is entitled to fifteen percent of all receipts Jones receives from G-III.

Ananta argued, in the alternative, that the G-III Licensing Agreement is a renewal or extension of the Gloria Gay Licensing Agreement. Because this Court concludes that G-III is the successor to, assignee of, and transferee of Gloria Gay, it need not reach this argument.

C. Attorneys' Fees

The 1992 Settlement Agreement provides that "[i]n any litigation . . . to enforce any provision of this Settlement Agreement, the prevailing party shall receive its reasonable attorneys' fees and costs." This litigation enforces the provision of the 1992 Settlement Agreement that requires Jones to pay Ananta a fifteen percent commission on Jones' receipts from Marcraft, Gloria Gay, and "their respective successors, assigns, transferees and affiliates." Because plaintiff is the prevailing party in this litigation, it is entitled to recover its reasonable attorneys fees and costs under the 1992 Settlement Agreement.

CONCLUSION

Plaintiff's motion for summary judgment is granted in its entirety. Under the terms of the Marcraft Agreement, the Gloria Gay Agreement, and the 1992 Settlement Agreement, plaintiff is entitled to a fifteen percent commission on all money Jones has received and will receive in the future from Marcraft, Gloria Gay, and G-III, including any money Jones receives to fund its national advertising campaign. Plaintiff is additionally entitled to attorneys' fees under the terms of the 1992 Settlement Agreement. This action is referred to Magistrate Judge Francis for a computation of damages and attorneys' fees.

SO ORDERED:


Summaries of

The Ananta Group v. Jones Apparel Group, Inc.

United States District Court, S.D. New York
Jun 11, 2001
01 CIV. 674 (DLC) (S.D.N.Y. Jun. 11, 2001)
Case details for

The Ananta Group v. Jones Apparel Group, Inc.

Case Details

Full title:THE ANANTA GROUP, LTD., Plaintiff, v. JONES APPAREL GROUP, INC. and JONES…

Court:United States District Court, S.D. New York

Date published: Jun 11, 2001

Citations

01 CIV. 674 (DLC) (S.D.N.Y. Jun. 11, 2001)

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