Opinion ID: 76376
Heading Depth: 2
Heading Rank: 1

Heading: The Plain Language of the Settlement Agreement

Text: 12 Whetstone argues that the first whereas clause's reference to Kraft NA's subsidiaries operates to bind Kraft UK to the Settlement Agreement. That clause states: WHEREAS, Kraft or one of its subsidiaries have been involved in the production and marketing of a `Chocolate Orange' confectionery product which is sold in a particular container (the `Kraft Trade Dress'). (Emphasis added). Whetstone argues that the purpose of the agreement was to redress the perceived invasion of rights possessed by Kraft or one of its subsidiaries. They allege that the Settlement Agreement included the first whereas clause to make clear that Kraft NA entered into the agreement as the manufacturer of the product. Thus, Whetstone maintains that Kraft NA, as the parent corporation of Kraft UK, entered into the agreement on behalf of itself as well as all of its subsidiaries who were manufacturing Terry's Chocolate Orange at the time it entered into the Settlement Agreement. Although some scenarios would allow Kraft NA to bind its subsidiaries, including Kraft UK, 8 such is not the case here. 13 First, the whereas clause is a true statement of the facts. Kraft UK is a subsidiary of Kraft NA and does produce and market Terry's Chocolate Orange. Consequently, the whereas clause accurately states Kraft NA's production system, but does not suggest that Kraft NA entered into the Settlement Agreement as a manufacturer. Rather, Kraft NA is an importer of Terry's Chocolate Orange and has a nonmanufacturing interest in protecting its own trade dress rights. See 15 U.S.C. § 1125(a). 9 Moreover, whereas clauses are not binding when the contract is otherwise unambiguous. Johnson v. Johnson, 725 So.2d 1209, 1212-13 (Fla. Dist.Ct.App.1999). They are merely prefatory recitations of the facts that lead the parties to enter the agreement. Id. 14 General principles of corporate law also dictate a conclusion that the whereas clause does not operate to bind Kraft UK. Corporations are separate legal entities and contracts made by a parent corporation do not bind a subsidiary merely because one corporation owns all of the stock of the other corporation. St. Petersburg Sheraton Corp. v. Stuart, 242 So.2d 185, 190 (Fla.Dist.Ct.App.1970); see Peacock v. General Motors Acceptance Corp., 432 So.2d 142, 143 (Fla.Dist.Ct.App.1983). The agreement, according to its terms, was between Kraft NA and Whetstone. Absent facts that would allow us to disregard Kraft UK's status as a separate entity, Kraft NA, acting as an importer alone, has no ability to bind Kraft UK, a separate entity, without Kraft UK's permission. See Southeast Capital Inv. Corp. v. Albemarle Hotel, Inc., 550 So.2d 49, 51 (Fla. Dist. Ct.App. 1989) (citing Dania Jai-Alai Palace, Inc. v. Sykes, 450 So.2d 1114 (Fla. 1984)); Peacock, 432 So.2d at 144 (discussing the circumstances under which the corporate form can be disregarded for torts committed by a related entity).
15 Whetstone also argues that the plain language of paragraph 3 of the agreement, the waiver clause, binds Kraft UK. That paragraph, in relevant part, states that all claims against Whetstone dealing with the trade dress of its chocolate-orange product are waived by Kraft NA and anyone claiming under, by or through it. Whetstone alleges that Kraft UK's claim is under, by or through Kraft NA and Kraft UK is therefore bound by the agreement. This argument has little merit for several reasons. 16 First, the Settlement Agreement explicitly uses the term subsidiary elsewhere in the agreement and, consequently, we should be reluctant to read this term into the waiver clause. Using the words under, by or through would be a cryptic method to bind the subsidiaries of Kraft NA, especially when the parties' referred to subsidiaries or affiliates in: (1) the reference in the first whereas clause to the fact that one of Kraft NA's subsidiaries produces Terry's Chocolate Orange; and (2) the first portion of paragraph 3, which discharges the affiliates of Whetstone from any infringement of the Kraft NA trade dress. The latter instance is particularly compelling because it appears in the same paragraph as the under, by or through it language that Whetstone argues binds Kraft UK. If the parties had intended to bind the affiliates or subsidiaries of Kraft NA, they would have included language similar to that used with respect to Whetstone. 17 Second, paragraph 4 shows how the phrase under, by or through should be interpreted and lends further support to the conclusion that under, by or through does not include Kraft UK. Paragraph 4 states that [t]he terms and provisions of this Agreement shall inure to the benefit of and bind the successors and assigns and legal representatives of both Kraft and Whetstone. This paragraph identifies the entities, other than the parties, who are bound by the Settlement Agreement. As such, under, by or through operates as a release from claims made by the successors and assigns and legal representatives of Kraft NA — those who would claim under, by or through Kraft NA. The question, therefore, becomes whether Kraft UK is a successor, assign, or legal representative of Kraft NA. We hold that it is not. 18 A successor is one that follows, especially one who succeeds to a throne, title, or estate or is elected or appointed to an office, dignity, or other position vacated by another. Webster's Third New Int'l Dictionary 2282 (1976); accord Black's Law Dictionary 1431 (6th ed. 1990). An assign, i.e. an assignee, is one appointed to act for another or one to whom a right or property is legally transferred. Webster's Third New Int'l Dictionary 132 (1976); accord Black's Law Dictionary 118-19 (6th ed. 1990). Thus, successors and assigns are those entities or individuals who have a claim under, by or through Kraft NA by virtue of some act or event, such as an appointment or merger. Here, Kraft UK is a subsidiary of Kraft NA and, as a subsidiary, it is merely related to Kraft NA through its corporate structure; it does not succeed Kraft NA and it has not been appointed to act for Kraft NA. Kraft UK, therefore, is not a successor or assign, and no credible argument can be made that it is Kraft NA's legal representative. Thus, any claims that Kraft UK has against Whetstone are not under, by or through Kraft NA. 10