Court Opinion

ID: 2971037
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:27:32.678542+00
Date Added: 2024-06-11T12:09:09.707068
License: Public Domain

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                Pursuant to Sixth Circuit Rule 206                       2    Hidrofiltros, et al. v. Rexair             No. 02-1823
        ELECTRONIC CITATION: 2004 FED App. 0001P (6th Cir.)
                    File Name: 04a0001p.06                                                  _________________
UNITED STATES COURT OF APPEALS                                                                   COUNSEL
                  FOR THE SIXTH CIRCUIT                                  ARGUED: Michael M. Jacob, RAYMOND & PROKOP,
                    _________________                                    Southfield, Michigan, for Appellants. Peter R. Bisio,
                                                                         HOGAN & HARTSON, Washington, D.C., for Appellee.
                                                                         ON BRIEF:        Michael M. Jacob, Kevin E. Sralla,
 HIDROFILTROS, DE MÉXICO,          X                                     RAYMOND & PROKOP, Southfield, Michigan, Howard B.
 S.A. DE C.V., and JOSÉ             -                                    Rockman, BARNES & THORNBURG, Chicago, Illlinois, for
 SALTIEL ABOUAF,                    -                                    Appellants. Peter R. Bisio, Craig A. Hoover, HOGAN &
                                    -  No. 02-1823                       HARTSON, Washington, D.C., Jeffrey A. Sadowski,
          Plaintiffs-Appellants, -
                                     >                                   HOWARD & HOWARD, Bloomfield Hills, Michigan, for
                                    ,                                    Appellee.
            v.                      -
                                    -                                                       _________________
 REXA IR, INC.,                     -
           Defendant-Appellee. -                                                                OPINION
                                    -                                                       _________________
                                   N
                                                                           BOYCE F. MARTIN, JR., Circuit Judge. This case
       Appeal from the United States District Court                      involves a straightforward interpretation of a settlement
      for the Eastern District of Michigan at Detroit.                   agreement that disposed of a previous trademark-related
    No. 01-74653—Avern Cohn, Senior District Judge.                      lawsuit that Rexair, Inc. filed in the district court in 1995
                                                                         against José Saltiel Abouaf and his company, Hidrofiltros, de
                   Argued: December 2, 2003                              México, S.A. de C.V. Saltiel and Hidrofiltros have filed a
                                                                         complaint alleging that Rexair breached the settlement
              Decided and Filed: January 6, 2004                         agreement by filing a trademark infringement lawsuit in a
                                                                         Portuguese court against an individual who is allegedly
        Before: MARTIN and MOORE, Circuit Judges;                        “affiliated” with Saltiel. The district court dismissed the
                McKEAGUE, District Judge.*                               complaint, holding that the settlement agreement did not
                                                                         prohibit Rexair from filing its Portuguese lawsuit. Because
                                                                         we believe there is no other reasonable interpretation of the
                                                                         settlement agreement, we affirm the district court’s judgment.

    *
      The Ho norable D avid W . McKeague, United States District Judge
for the Western District of Michigan, sitting by designation.

                                  1
No. 02-1823                 Hidrofiltros, et al. v. Rexair        3   4      Hidrofiltros, et al. v. Rexair              No. 02-1823

                    I. BACKGROUND                                         or on machines or accessories. Saltiel and Hidrofiltros
                                                                          also agree not to use, either directly or indirectly (e.g.,
                A. The Underlying Lawsuit                                 through Saltiel family members, agents, employees or
                                                                          companies owned or controlled by or affiliated with
   Rexair is the manufacturer of the “Rainbow” vacuum                     Saltiel), any product manual or packaging (including the
cleaner, which it distributes in over eighty countries. Prior to          box in which the Robot vacuum cleaner is marketed or
the 1995 litigation, Saltiel had distributed Rexair’s products            sold), that is the same or confusingly similar to those
in Mexico through his company, Hidrofiltros. In 1995,                     used for Rexair’s Rainbow® products. The sole
Rexair filed a complaint in the district court against Saltiel            exception to this is that Saltiel and Hidrofiltros or their
and Hidrofiltros, alleging that they manufactured – through               agents or affiliates, without being deemed to be in
another company owned by Saltiel, called Turmix – and sold                violation of the foregoing provisions of this subparagraph
a knock-off of the Rainbow called the “Robot.” Rexair’s                   2.a., may use up the remaining stock of certain existing
complaint asserted various contract, tort, trademark and                  materials in conjunction with the sale of Robot vacuum
copyright claims, and Saltiel and Hidrofiltros, in turn,                  cleaners . . . .
asserted several counterclaims. The district court dismissed
Rexair’s trademark and copyright claims for lack of                   Paragraph 3 states:
jurisdiction because the alleged acts of infringement took
place in Mexico and were perpetrated by Mexican citizens.                 The parties agree that the Court in which this Action is
It also dismissed Saltiel’s and Hidrofiltros’s counterclaims.             pending [i.e., the United States District Court for the
After those rulings, the only claims that remained were                   Eastern District of Michigan] will retain exclusive and
Rexair’s contract and business tort claims.                               continuing jurisdiction over this Agreement and over
                                                                          Saltiel, Hidrofiltros and Rexair for purposes of enforcing
              B. The Settlement Agreement                                 this Agreement . . . .
  The parties subsequently entered into the settlement                                    C. The Present Dispute
agreement at issue in this case, by which Saltiel and
Hidrofiltros agreed, among other things, to pay Rexair a total           Following the execution of the settlement agreement, no
of $100,000.00 and to refrain from infringing Rexair’s                disputes arose between the parties for almost four years. In
Rainbow trademark in the future, in exchange for the                  May 2001, however, the situation changed. Rexair filed a
voluntary withdrawal of Rexair’s remaining contract and tort          lawsuit in Lisbon, Portugal, against Joao Paulo da Silva
claims. The relevant provisions of the settlement agreement,          Vilarinho, an individual who sold Turmix’s Robot vacuum
for purposes of this appeal, are paragraphs 2a and 3.                 cleaners in Portugal. Rexair alleged that by importing and
Paragraph 2a states:                                                  selling those vacuum cleaners, Vilarinho, through his
                                                                      company, Delphin Lusitana Lda, infringed its Rainbow
  Saltiel and Hidrofiltros agree not to use, either directly or       trademark. Accordingly, Rexair requested a seizure of the
  indirectly (e.g., through Saltiel family members, agents,           allegedly infringing products and sought an injunction
  employees or companies owned or controlled by or                    preventing Vilarinho from importing and selling them.
  affiliated with Saltiel), any of Rexair’s trademarks or any
  confusingly similar trademarks in either printed materials
No. 02-1823                     Hidrofiltros, et al. v. Rexair         5    6    Hidrofiltros, et al. v. Rexair             No. 02-1823

  On July 5, 2001, Saltiel and Hidrofiltros filed a motion in               The district court also reasoned that paragraphs 2a and 3
the district court seeking a temporary restraining order and a              “simply mean that should Saltiel and Hidrofiltros, or its
preliminary injunction prohibiting Rexair from proceeding                   agents, employees, or affiliates be found (in any court of
with the Portuguese lawsuit against Vilarinho. On July 31,                  competent jurisdiction) to have infringed Rexair’s trademarks,
after briefing and oral argument, the district court denied the             then Rexair may come to this Court and sue Saltiel and
motion in a telephonic hearing, reasoning that it would be                  Hidrofiltros for breach of the [settlement agreement] for
inappropriate to enjoin an ongoing case in Portugal. On                     having violated ¶ 2a.”
July 25, the Portuguese trial court denied Rexair’s motion for
injunctive relief against Vilarinho, a decision that the                      Rexair argues that this appeal is frivolous and has,
Portuguese appellate court affirmed on November 20.1                        accordingly, filed a motion for sanctions against Saltiel and
                                                                            Hidrofiltros, along with their counsel, pursuant to Federal
  On December 6, Saltiel and Hidrofiltros filed the instant                 Rule of Appellate Procedure 38 and 28 U.S.C. §§ 1912 and
complaint against Rexair in the district court, alleging breach             1927.
of contract and seeking declaratory relief. Specifically, the
complaint alleged that Rexair breached the parties’ settlement                                    II. ANALYSIS
agreement by filing “a Complaint in Portugal against an
agent/employee of Saltiel, namely: Vilarinho, alleging various                 We review de novo a district court’s dismissal of a
violations of the same or corresponding Rexair trademarks                   complaint for failure to state a claim on which relief can be
which were at issue” in the parties’ underlying dispute. The                granted. Theobald v. Bd. of Cty. Comm’rs, 332 F.3d 414, 415
complaint requested a declaratory judgment providing, among                 (6th Cir. 2003). While we must consider as true the well-
other things, that the district court “has exclusive and                    pleaded allegations of the complaint and construe them in the
continuing jurisdiction over Saltiel, Hidrofiltros and Rexair               light most favorable to the plaintiff, we need not accept as
for purposes of enforcing Rexair’s trademark(s) against                     true legal conclusions or unwarranted factual inferences. See
Saltiel and Hidrofiltros and others as defined in ¶¶ 2a and 2c              Booker v. GTE.net LLC, No. 02-6190, 2003 WL 22967930,
of the Settlement Agreement and to resolve any and all                      at * 2 (Dec. 5, 2003). Under Michigan law, which applies in
disputes which may arise between Saltiel, Hidrofiltros and                  this diversity case, we must enforce the terms of the
Rexair only with respect to such trademark(s).”                             settlement agreement as written, “interpreting the
                                                                            unambiguous language in its plain and easily understood
   On May 23, the district court granted Rexair’s motion to                 sense.” Gelman Sciences, Inc. v. Fidelity and Cas. Co. of
dismiss the complaint, holding that the settlement agreement                New York, 572 N.W.2d 617, 623 (Mich. 1998) (citing Upjohn
“clearly does not require Rexair to bring a trademark suit in               Co. v. New Hampshire Ins. Co., 476 N.W.2d 392, 397 (Mich.
this Court and indeed Rexair could not have brought a                       1991)). “If the contract terms are not ambiguous, then
trademark case, based on Portuguese trademark law against                   contradictory inferences that may be drawn are subjective and
Vilarinho, a Portuguese national and owner of a Portuguese                  irrelevant.” Pierson Sand & Gravel, Inc. v. Pierson Twp.,
company, in this Court under the [settlement agreement].”                   851 F. Supp. 850, 858 (W.D. Mich. 1994) (citation omitted),
                                                                            aff’d, 89 F.3d 835 (6th Cir. 1996). We believe, and the
                                                                            parties agree, that the settlement agreement is unambiguous.
    1                                                                       Therefore, we are bound to enforce the plain meaning of its
       Rexair subsequently appealed to the supreme court of Portugal, but   terms.
later voluntarily withd rew that appeal.
No. 02-1823                 Hidrofiltros, et al. v. Rexair     7    8       Hidrofiltros, et al. v. Rexair                      No. 02-1823

   Saltiel and Hidrofiltros argue that the settlement agreement     suggested by Saltiel and Hidrofiltros. Because Rexair’s
contains an explicit promise by Rexair to forbear the initiation    Portuguese lawsuit was not brought “for purposes of
of foreign trademark litigation against them or their agents or     enforcing” the settlement agreement, the claims asserted in
affiliates in any forum other than the district court for the       that lawsuit do not fall within any “exclusive” jurisdiction
Eastern District of Michigan, and that Rexair has breached          that the Eastern District of Michigan may possess. Therefore,
that promise by filing suit in Portugal. Specifically, they         Rexair did not breach the settlement agreement by filing its
contend that Rexair’s Portuguese lawsuit was brought “for           Portuguese lawsuit.2
purposes of enforcing” paragraph 2a of the settlement
agreement because it sought to prevent an individual                  With respect to Rexair’s motion for sanctions, while we
“affiliated with Saltiel” from infringing Rexair’s trademarks.      certainly believe that the time and resources of the parties and
Because paragraph 3 provides that the district court retains        the Court would have been better spent on matters other than
“exclusive” jurisdiction over the parties “for purposes of          this appeal, we nevertheless find that the circumstances do not
enforcing” the settlement agreement, Saltiel and Hidrofiltros       warrant the imposition of sanctions against Saltiel or
claim that Rexair breached the settlement agreement by filing       Hidrofiltros, or their counsel.
its lawsuit outside of that forum.
                                                                     For the foregoing reasons, the district court’s judgment is
   We disagree. Contrary to the assertion of Saltiel and            AFFIRMED and Rexair’s motion for sanctions is DENIED.
Hidrofiltros, the settlement agreement is completely silent as
to Rexair’s ability to file a lawsuit in any forum it chooses for
purposes other than enforcing the agreement. While
paragraph 3 contemplates that the district court possesses
“exclusive” jurisdiction over the parties “for purposes of
enforcing” the settlement agreement, neither paragraph 2a nor
any other provision of the agreement prohibits Rexair from
pursuing other remedies that it may have in any appropriate
forum. Rexair’s Portuguese lawsuit was by no means brought
“for purposes of enforcing” the parties’ settlement agreement.
Rather, the purpose of the Portuguese lawsuit was to prevent
Vilarinho from violating Portuguese law by infringing
Rexair’s trademarks. Rexair sought to enjoin Vilarinho from
selling the infringing products, not to recover any damages
from Saltiel or Hidrofiltros for breach of the settlement
agreement or to force them to comply with its terms.                    2
                                                                          Counsel for Saltiel and H idrofiltros has argued that we should
                                                                    remand this case to the district court for an evidentiary hearing on the
  Had the parties intended to place additional restrictions         issue of whether Vilarinho was “affiliated with Saltiel” within the
upon Rexair’s right to pursue legal remedies, they certainly        meaning of paragraph 2a. Th at issue is irrelevant, however, given our
could have drafted their settlement agreement accordingly.          con clusion that Rexair’s Portuguese lawsuit was not brought “for
As written, however, the settlement agreement simply cannot         purposes of enforc ing” the settlement agreement and, hence , could not fall
                                                                    within any “exclusive” jurisdiction that the Eastern District of Michigan
be interpreted as limiting Rexair’s rights in the manner            may have possessed by virtue of paragraph 3.