Textile Deliveries, Inc. v. Lawrence Stagno

52 F.3d 46
CourtCourt of Appeals for the Second Circuit
DecidedApril 17, 1995
DocketNo. 918, Docket 94-7640
StatusPublished
Cited by1 cases

This text of 52 F.3d 46 (Textile Deliveries, Inc. v. Lawrence Stagno) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Textile Deliveries, Inc. v. Lawrence Stagno, 52 F.3d 46 (2d Cir. 1995).

Opinion

VAN GRAAFEILAND, Circuit Judge:

This is an appeal-from a judgment of the United States District Court for the Southern District of New York in favor of Textile Deliveries, Inc., Textile Delivery of New Jersey, Inc. and Stag Delivery, Inc., trucking companies owned and operated by Cosmo and James Catania, and against Lawrence Stagno and two companies owned and operated by Stagno, Textile Delivery of New York, Inc. and Stag Motor Lines, Inc. The judgment, in the amount of $797,932, followed a jury trial before Judge Charles Metzner. We affirm the .finding of liability but remand for retrial on the issue of damages unless plaintiffs agree to remit that portion of the damage award in excess of $258,254.

Cosmo Catania formed Textile Deliveries, Inc. in 1959. In 1978, Lawrence Stagno, Catania’s nephew, began working for the Ca-tadas at Textile Deliveries’ Brooklyn office. Shortly thereafter, Cosmo Catada formed Stag Delivery, Inc. to expand Textile Deliveries, Inc.’s operations in the New York City Garment Center. In 1982, after a position opened in Textile Deliveries’ Garment Center branch, Cosmo Catada asked Stagno to fill it. This was accomplished pursuant to an oral agreement, the exact terms of which are now in dispute.

According to the Catadas, they agreed to refer all of their deliveries in the Garment Center area to Stagno, and Stagno wodd keep the profits from these deliveries so long as he managed the Garment Center business and paid the Catadas 3/38ths of the revenue he received from Billings Freight Systems, the Catadas’ largest customer. In addition, Stagno was not to operate outside the Garment Center and the Catadas were not to compete against Stagno in the Garment Center.

Stagno’s version of the 1982 agreement was substantially different. He maintained that he purchased the Garment Center business from Cosmo Catania for $30,000 and a promise to remit 3/38ths of Billings’ revenues for a period of two years. In fact, however, Stagno made the payments from 1982 until December 1987. When Stagno stopped paying in 1987, Textile Deliveries, Inc. opened a terminal in the Garment Center. Stagno then decided he wanted to go back to the agreement and resumed the payments, following which the Catadas closed the Garment Center terminal they had opened. Thereafter, Stagno made the payments until May 1989, when he once again discontinued them. In September 1989, the Catadas reopened a terminal in the Garment Center area and it has since remained opened.

When Stagno again ceased making payments in 1989, the Catadas commenced the instant action. They contended that Stagno breached the agreement by discontinuing payments and by doing business outside the Garment Center with a number of long-term customers of the Catadas. As a basis for federal court jurisdiction, the Catadas alleged violations of the Lanham Act, 15 U.S.C. § 1125. Relying on the doctrine of pendent jurisdiction, they included a number of state causes of action in their complaint, including breach of contract, unfair trade, practices, violations of N.Y.GenJBus.L. §§ 133, 349 & 350, fraudulent and infringing misuse of cor[48]*48porate names, unfair competition, failure to make agreed-upon reports, falsification of such reports, interference with plaintiffs’ customer relations, deceptive and false advertising, conversion of property, etc. Prior to trial, Stagno moved unsuccessfully to dismiss the Lanham Act cause of action for failure to state a claim. He also moved to dismiss the pendent state claims, but this motion too was denied. However, most of plaintiffs’ state law claims were denied or withdrawn by the first day of trial, and by the end of the trial, the only state law claim that remained was the one for breach of contract.

Despite the fact that the district court dismissed the Lanham Act cause of action at the close of the plaintiffs’ ease, it retained jurisdiction over the breach of contract claim. The district court sent this claim to the jury together with Stagno’s counterclaim for alleged unjust enrichment based upon payments allegedly made to plaintiffs under duress between May 1984 and May 1989. The jury rejected the defendants’ counterclaim and awarded Textile Deliveries, Inc., Textile Delivery of New Jersey, Inc. and Stag Delivery, Inc. judgment against Lawrence Stagno, Textile Delivery of New York, Inc. and Stag Motor Lines, Inc. in the sum of $797,932.

Appellants assert several grounds for reversal which we find unpersuasive. The first of these challenges the district court’s decision to assume and retain jurisdiction in the face of what appellants contend was an obviously defective claim under the Lanham Act. The record shows that on May 15,1990 the defendants moved before District Judge John Keenan to dismiss the Lanham Act claim. Judge Keenan denied the motion, observing as he did so that the corporate names adopted by Stagno were “practically identical” with those that the Catanias had put to senior use and that' the type of services and areas served by the parties likewise were identical. Although three and a half years elapsed between Judge Keenan’s decision and the start of trial, during which time extensive pretrial proceedings were conducted, defendants did not move again to dismiss the Lanham Act cause of action until the end of the plaintiffs’ case, at which time the motion was granted. In denying defendants’ post-trial motion for an award of attorney’s fees under the Lanham Act, Judge Metzner said:

Defendants claim that plaintiffs manufactured their Lanham Act claim solely for the purpose of creating jurisdiction in the federal court, that plaintiffs had no good faith basis for bringing the Lanham Act claim, and that plaintiffs did not make a good faith attempt to prove any of the elements of a Lanham Act violation. The court disagrees.
Counsel for plaintiffs, in his opening statement to the jury, stated that he would prove that the similarity between the plaintiffs’ names and the corporate defendants’ were “inescapable,” and that they could and indeed had caused confusion. A reading of the caption of this case clearly shows the basis for the claim. During the course of trial, plaintiffs attempted to prove that their descriptive names had developed secondary meaning, thus entitling them to protection under the Lanham Act, and that the defendants had used these names in a manner which caused confusion. In an attempt to prove secondary meaning, plaintiffs introduced advertising brochures, jackets with the company name on them, promotional pens, advertisements in industry magazines, and letters from satisfied customers. Plaintiff [sic] also offered testimony that their name was advertised on their 15 to 20 trucks.
In an effort to show a likelihood of confusion, plaintiffs pointed out the degree of similarity between the plaintiffs’ and defendants’ names, introduced evidence that defendant Stagno .forged plaintiff Cosmo Catania’s name in connection with the incorporation of one of the defendant companies in order to show that defendants did not adopt plaintiffs’ name in good faith, and also introduced evidence which purportedly showed that Billings Freight, a customer of both plaintiffs and defendants, was actually confused by the defendants’ use of plaintiffs’ name.
While plaintiffs ultimately failed to present enough evidence to prove their Lan-ham Act claim at trial, the court is satisfied that their failure was not a result of bad [49]

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52 F.3d 46, Counsel Stack Legal Research, https://law.counselstack.com/opinion/textile-deliveries-inc-v-lawrence-stagno-ca2-1995.