14-2405

MOREFUN CO., LTD. V. MARIO BADESCU SKIN CARE INC.

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY

ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL

RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN

CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER

THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY

ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT

REPRESENTED BY COUNSEL.

1 At a stated term of the United States Court of Appeals

2 for the Second Circuit, held at the Thurgood Marshall United

3 States Courthouse, 40 Foley Square, in the City of New York,

on the 19th 4 day of December, two thousand fourteen.

5

6 PRESENT: DENNIS JACOBS,

7 DEBRA ANN LIVINGSTON,

8 RAYMOND J. LOHIER, Jr.,

9 Circuit Judges.

10

11 - - - - - - - - - - - - - - - - - - - -X

12 MOREFUN CO., LTD., 

13 Plaintiff-Appellant,

14

15 -v.- 14-2405

16

17 MARIO BADESCU SKIN CARE INC., 

18 Defendant-Appellee.

19 - - - - - - - - - - - - - - - - - - - -X

20

21 FOR APPELLANT: DANIEL L. BROWN, Sheppard,

22 Mullin, Richter & Hampton LLP,

23 New York, New York.

24

25 FOR APPELLEE: EDWARD M. LARKIN (with Zachary

26 W. Silverman on the brief),

1
1 Edwards Wildman Palmer LLP, New

2 York, New York.

3

4 Appeal from a judgment of the United States District

5 Court for the Southern District of New York (Schofield, J.).

6

7 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED

8 AND DECREED that the judgment of the district court be

9 AFFIRMED. 

10

11 Plaintiff Morefun Co. appeals from the judgment of the

12 United States District Court for the Southern District of

13 New York (Schofield, J.), granting the motion of defendant

14 Mario Badescu Skin Care Inc. (“MBSC”) to dismiss pursuant to

15 Federal Rule of Civil Procedure 12(b)(6). We assume the

16 parties’ familiarity with the underlying facts, the

17 procedural history, and the issues presented for review. 

18

19 We review de novo the grant of a motion to dismiss

20 under Rule 12(b)(6), “accepting as true factual allegations

21 made in the complaint, and drawing all reasonable inferences

22 in favor of the plaintiffs.” Town of Babylon v. Fed. Hous.

23 Fin. Agency, 699 F.3d 221, 227 (2d Cir. 2012). We also

24 apply de novo review to “both whether a contract is

25 ambiguous, and, when the district court finds a contract

26 unambiguous, its interpretation of the contract.” Bank of

27 N.Y. v. First Millennium, Inc., 607 F.3d 905, 914 (2d Cir.

28 2010) (internal citations omitted).

29

30 Morefun was the Korean distributor of Mario Badescu

31 Healing Cream, a product of MBSC. After purchasing seven

32 batches of Mario Badescu Healing Cream and distributing it

33 in the Republic of Korea, Morefun learned that one batch

34 (“Batch 372") was tainted with steroids. At great expense

35 to Morefun, the Korean Food and Drug Administration issued

36 an order for the recall and destruction of every unit that

37 had been a part of Batch 372. The parties entered a

38 Settlement Agreement on June 10, 2013, with MBSC agreeing to

39 pay $492,000 and to partially indemnify Morefun in exchange

40 for Morefun’s release of claims “arising from or in

41 connection with [Morefun]’s purchase or sale of the Product

42 from MBSC.” (Settlement Agreement ¶ 4.) The very next

43 month, both Morefun and the Korean public learned that the

2
1 other batches of Mario Badescu Healing Cream were similarly

2 tainted with steroids, prompting a comprehensive recall of

3 the other six batches. Morefun filed this action against

4 MBSC in the U.S. District Court for the Southern District of

5 New York to recover up to $1.7 million, the cost of this

6 comprehensive recall.

7

8 New York law, which governs in this diversity action,

9 provides that “[g]enerally, a valid release constitutes a

10 complete bar to an action on a claim which is the subject of

11 the release.” Centro Empresarial Cempresa S.A. v. Am.

12 Movil, S.A.B. de C.V., 952 N.E.2d 995, 1000 (N.Y. 2011)

13 (internal quotation marks omitted). This precept gains even

14 more strength when the release is unambiguous: “[w]here

15 . . . the language of a release is clear and unambiguous,

16 the signing of a release is a ‘jural act’ binding on the

17 parties.” Booth v. 3669 Delaware, Inc., 703 N.E.2d 757, 758

18 (N.Y. 1998) (quoting Mangini v. McClurg, 249 N.E.2d 386, 390

19 (N.Y. 1969)).

20

21 Morefun’s claims are barred by the Settlement

22 Agreement. Morefun agreed that it

23

24 waives all legal or equitable claims both direct and

25 indirect including but not limited to the loss of

26 good will which it may have against MBSC arising

27 from or in connection with [Morefun]’s purchase or

28 sale of the Product from MBSC and shall not take any

29 action against MBSC, legal or otherwise, in respect

30 of such purchase and hereby releases and discharges

31 MBSC from any further liability with respect thereto

32 except as has been set forth in Paragraphs 2

33 [regarding the $492,000 payment from MBSC] and 3

34 [regarding indemnification].

35

36 (Settlement Agreement ¶ 4.) At the outset, the Settlement

37 Agreement defines “Product” as “Mario Badescu Healing

38 Cream.” (Id. ¶ A.) A plain reading of the Settlement

39 Agreement therefore releases MBSC from all claims “arising

40 from or in connection with [Morefun]’s purchase or sale of

41 the Product [meaning Mario Badescu Healing Cream] from

3
1 MBSC.” This litigation falls squarely within that

2 unambiguous release.

3

4 Seeking to avoid this conclusion, Morefun contends that

5 the meaning of “Product” is ambiguous, referring

6 alternatively to: (a) Mario Badescu Healing Cream, or (b)

7 the specific batch of product whose recall prompted the

8 settlement. But on the face of the contract, this ambiguity

9 is illusory. While the interpretation of “Product” as

10 “Mario Badescu Healing Cream” finds support in the plain

11 language based on an explicit definition, the alternative

12 interpretation as limited to Batch 372 has no basis in the

13 contract wording: Morefun concedes as much by relying on

14 parol evidence for its narrow reading of “Product.” Parol

15 evidence “is not admissible to create an ambiguity in a

16 written agreement which is complete and clear and

17 unambiguous upon its face.” R/S Assocs. v. N.Y. Job Dev.

18 Auth., 771 N.E.2d 240, 242 (N.Y. 2002) (quoting W.W.W.

19 Assocs., Inc. v. Giancontieri, 566 N.E.2d 639, 642 (N.Y.

20 1990)). The release unambiguously applies to claims related

21 to Morefun’s purchase or sale of Mario Badescu Healing Cream

22 from MBSC, including the claims in this litigation.

23

24 Morefun further challenges the release by alleging that

25 MBSC defrauded Morefun into signing the Settlement

26 Agreement. A plaintiff can avoid a signed release by

27 “show[ing] that there has been fraud”; however, if the

28 release is broad enough to encompass fraud claims, the

29 plaintiff cannot rely on fraudulent inducement unless “it

30 can identify a separate fraud from the subject of the

31 release.” Centro Empresarial Cempresa, 952 N.E.2d at 1000. 

32 In this case, the alleged fraud took the form of MBSC’s

33 assurances (nowhere memorialized in the contract) relating

34 to the skin care product that Morefun had purchased from

35 MBSC. The release, in turn, encompasses all claims relating

36 to Morefun’s purchase of skin care product from MBSC. 

37 Therefore, Morefun has not “identif[ied] a separate fraud

38 from the subject of the release” as required under New York

39 law. The fraud allegations are no barrier to enforcement of

40 the release.

41

4
1 For the same reason, we agree with the dismissal of

2 Morefun’s claim for rescission of the Settlement Agreement. 

3 A release that encompasses fraud claims cannot be rescinded

4 on the basis of the same fraud that is the subject of the

5 release. See Bellefonte Re Ins. Co. v. Argonaut Ins. Co.,

6 757 F.2d 523, 527 (2d Cir. 1985). As to the cause of action

7 for indemnification, Morefun does not challenge on appeal

8 the district court’s conclusion that Morefun abandoned the

9 claim as unripe.

10

11 For the foregoing reasons, and finding no merit in

12 Morefun’s other arguments, we hereby AFFIRM the judgment of

13 the district court.

14

15 FOR THE COURT:

16 CATHERINE O’HAGAN WOLFE, CLERK

17

18

5