Court Opinion

ID: 802619
Source: CourtListenerOpinion
Date Created: 2012-06-19 19:25:21+00
Date Added: 2024-06-11T18:00:04.804575
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 11-1692

MONSTER DADDY, LLC,

                Plaintiff - Appellee,

           v.

MONSTER CABLE PRODUCTS, INCORPORATED,

                Defendant - Appellant.

Appeal from the United States District Court for the District of
South Carolina, at Greenville.    Henry M. Herlong, Jr., Senior
District Judge. (6:06-cv-00293-HMH)

Argued:   May 18, 2012                    Decided:   June 19, 2012

Before KEENAN, WYNN, and FLOYD, Circuit Judges.

Affirmed by unpublished opinion.        Judge Keenan   wrote   the
opinion, in which Judge Wynn and Judge Floyd joined.

ARGUED: Kirsten Elena Small, NEXSEN PRUET, LLC, Greenville,
South Carolina, for Appellant. Peter Jester Gleekel, WINTHROP &
WEINSTINE, PA, Minneapolis, Minnesota, for Appellee.  ON BRIEF:
Sara Kanos, NEXSEN PRUET, LLC, Greenville, South Carolina;
Robert Payne, Scott J. Allen, LARIVIERE, GRUBMAN & PAYNE, LLP,
Monterey, California, for Appellant. Thomas H. Boyd, Bradley J.
Walz, WINTHROP & WEINSTINE, PA, Minneapolis, Minnesota, for
Appellee.

Unpublished opinions are not binding precedent in this circuit.
BARBARA MILANO KEENAN, Circuit Judge:

      In this appeal, we consider a challenge to the district

court’s award of attorneys’ fees to Monster Daddy, LLC (Monster

Daddy),     based      on        the   court’s       holding      that        Monster      Cable

Products,       Inc.    (Cable         Products)     breached       a    forum      selection

clause    contained         in    a    settlement      agreement         executed        by   the

parties.        Cable Products contends that the district court erred

in summarily enforcing the forum selection clause, arguing that

disputed    factual      questions          remained     regarding        another        alleged

breach of the settlement agreement.                     Cable Products also argues

that the language of the settlement agreement did not support

the   attorneys’       fee       award.       Upon    our   review,           we   affirm     the

district court’s decision awarding attorneys’ fees to Monster

Daddy,    because      the       forum      selection    clause         was    independently

enforceable under the terms of the parties’ contract and Monster

Daddy    was     a   “prevailing         party,”     within       the    meaning      of      that

contract term.

                                               I.

      In 2006, Monster Daddy filed a declaratory judgment action

against    Cable       Products        in    federal     district        court      in     South

Carolina, seeking a declaration that Monster Daddy’s trademark

rights     in    certain         cleaners,      waxes,      and     adhesives        did      not

infringe Cable Products’ trademark rights in various electronic

                                               2
cables and their component parts.          In 2007, after the parties

entered into a settlement agreement (the settlement agreement),

Monster Daddy dismissed its declaratory judgment action.

     Two provisions of the settlement agreement are material to

our resolution of this appeal.          First, the settlement agreement

included a forum selection clause (the forum selection clause),

which provided:

     Choice of Law; Jurisdiction.   This Agreement shall be
     governed by and construed in accordance with the laws
     of the United States and the State of South Carolina
     without regard to internal conflict of laws rules.
     The Parties agree that any claim asserted in any legal
     proceeding by one party against the other shall be
     commenced and maintained in the United States District
     Court for South Carolina or a South Carolina state
     court of competent jurisdiction.   Any mutually agreed
     to alternative dispute resolution proceeding shall
     take place in Greenville, South Carolina.

(Emphasis added.)

     Second,    the   settlement   agreement    contained   a   provision

allowing an award of attorneys’ fees and costs incurred by a

prevailing party in enforcement of the agreement (the attorneys’

fees clause).    This clause stated:

     Attorney Fees and Costs.    In the event of any breach
     of this Agreement, the prevailing party shall be
     entitled to recover not only the amount of any
     judgment which may be awarded in its favor but also
     all such other damages, costs and expenses that may be
     incurred by the party, including but not limited to
     court costs, reasonable attorneys’ fees, and all other
     reasonable costs and expenses.

                                    3
     In    2010,     Monster     Daddy     filed       an     action    against          Cable

Products in federal district court in South Carolina (the South

Carolina     action)     asserting,       among    other        things,         that     Cable

Products     breached    the     settlement       agreement.           In       its    answer,

Cable Products alleged that Monster Daddy had committed a prior

material breach of the settlement agreement by failing to abide

by certain terms in Monster Daddy’s trademark applications and

that, as a result of that prior breach, Cable Products was no

longer bound by the settlement agreement.

     After     Monster        Daddy   filed      the        South   Carolina           action,

Monster Daddy learned that an affiliate of Cable Products was

selling    certain      car    cleaners    and     waxes       which,       according       to

Monster Daddy, constituted an intentional infringement of its

trademark rights.             Monster Daddy accordingly sought leave to

amend its complaint in the South Carolina action to include a

claim for intentional trademark infringement.                           Cable Products

opposed Monster Daddy’s request to amend, and filed an action

against Monster Daddy in federal district court in California

seeking a declaratory judgment that the sales of the various car

cleaners and waxes did not infringe Monster Daddy’s trademark

rights (the California action).

     Monster Daddy thereafter filed in the South Carolina action

a   motion    to   amend       its    complaint        to    include        a    claim     for

intentional trademark infringement, and a motion to dismiss the

                                           4
California action or to enjoin Cable Products from proceeding in

that    action.         The      district       court      in    South      Carolina       granted

Monster    Daddy’s          motion       to    amend,     but     denied       the    motion      to

dismiss       the    California          action         citing       the    court’s       lack    of

authority       to      dispose          of     a       matter        pending        in    another

jurisdiction.           However, the district court in South Carolina

found    that       Cable     Products’         tactic     in     filing       the    California

action was “deceptive,” and agreed to consider the imposition of

sanctions against Cable Products.

       When     Cable       Products          failed      to     dismiss      the     California

action, Monster Daddy retained counsel to file a motion in that

action to transfer Cable Products’ claims to the district court

in South Carolina.               After Monster Daddy filed this motion, Cable

Products voluntarily dismissed the California action.

       Monster Daddy later filed in the South Carolina action a

motion to enforce the settlement agreement, arguing that Cable

Products      breached        the    forum       selection           clause    by    filing       the

California      action.            The    district        court       agreed,       and    invited

Monster    Daddy      to      seek    reimbursement             of    its     attorneys’         fees

incurred as a result of Cable Products’ breach of the forum

selection clause.             Monster Daddy later filed a motion requesting

reimbursement of about $9,000 in attorneys’ fees.                                    After Cable

Products      failed        to    respond       to      Monster       Daddy’s       motion,      the

district      court     awarded          Monster        Daddy     the      amount     requested.

                                                    5
Cable Products filed a timely notice of appeal from the district

court’s award of attorneys’ fees.

                                         II.

      Cable    Products     argues     that     the    district      court       erred    in

summarily enforcing the settlement agreement, because there was

an   unresolved      factual     dispute       at    the     time    of    the     court’s

decision   regarding      which      party     first    breached      the    settlement

agreement.         Cable Products argues that if a court determines

that Monster Daddy committed the first material breach of the

settlement      agreement,       Cable   Products           would    not     have    been

required      to    perform    its    obligations           under    the     settlement

agreement,      including      the    obligation           imposed    by     the    forum

selection clause.

      Cable Products also challenges the district court’s award

of attorneys’ fees on the grounds that: 1) Monster Daddy was not

a    “prevailing      party”     under       the     terms     of    the     settlement

agreement,     because     Cable     Products        voluntarily       dismissed         the

California action; and 2) the attorneys’ fees incurred in the

California     action     were    beyond       the     scope    of    the    settlement

agreement’s enforcement provision.                  We address each argument in

turn.

      Generally, we review under an abuse of discretion standard

a district court’s decision to enforce a settlement agreement

                                           6
and   to   award    attorneys’          fees.        See   Bosley     v.   Mineral     Cnty.

Comm’n, 650 F.3d 408, 411 (4th Cir. 2011) (attorneys’ fees);

Hensley v. Alcon Labs., Inc., 277 F.3d 535, 541 (4th Cir. 2002)

(enforcement of settlement agreement).                         However, we review a

district court’s interpretation of the language of a settlement

agreement, like a court’s interpretation of other contractual

language, de novo.             Nehi Bottling Co. v. All-American Bottling

Corp., 8 F.3d 157, 162 (4th Cir. 1993).

      The parties agree that our interpretation of the settlement

agreement    is     governed       by    South       Carolina    law.         Under    South

Carolina law, the issue whether a contract is ambiguous, and the

interpretation of an unambiguous contract, are questions of law

decided by the court.              S.C. Dep’t of Natural Res. v. Town of

McClellanville,          550    S.E.2d        299,    302-03     (S.C.     2001).          The

language    of     a     contract        is     ambiguous      when     its    terms       are

susceptible to several reasonable interpretations.                            Id. at 302.

In such cases, the court should consider the parties’ intent in

determining      the     meaning    of    the       language    employed.        Davis      v.

Davis, 641 S.E.2d 446, 452 (S.C. Ct. App. 2006).

      When the language of a contract is unambiguous, however, a

court’s    only    function       is     to    interpret       the   contract’s       lawful

meaning    and     the    intent    of        the    parties    as    expressed       in   the

contract’s terms.              Miles v. Miles, 711 S.E.2d 880, 883 (S.C.

2011).     Thus, when contract language is unambiguous, the plain

                                                7
language     of    the    contract      determines       its     force       and   effect.

McGill v. Moore, 672 S.E.2d 571, 574 (S.C. 2009).

     We begin by addressing Cable Products’ primary argument,

that the district court was precluded from enforcing the forum

selection     clause       of     the       settlement      agreement,        given     the

unresolved dispute regarding whether Monster Daddy committed a

prior    material       breach     of   the       agreement.      In     effect,      Cable

Products    argues       that    so   long    as    there     remains    an    unresolved

allegation that one party committed a prior material breach of a

settlement agreement, the other provisions of that settlement

agreement are unenforceable.                We disagree with this argument.

     By including a forum selection clause in the settlement

agreement,        the    parties      implicitly       recognized       that       disputes

concerning the agreement could occur at a later date.                          The forum

selection clause manifested the parties’ intent regarding the

forums where any such future disputes would be resolved.                               See

Jumara v. State Farm Ins. Co., 55 F.3d 873, 880 (3d Cir. 1995).

Because the forum selection clause was drafted to address the

treatment of future alleged breaches, any claim that the clause

became     unenforceable         as     a     result     of     such     a    breach     is

inconsistent with the very purpose of the clause.                              See Texas

Source Group, Inc. v. CCH, Inc., 967 F. Supp. 234, 237 (S.D.

Tex. 1997).

                                              8
      Moreover, if we were to accept Cable Products’ argument,

parties    could     readily     shirk         their    contractual        obligation    to

resolve disputes in a particular forum.                        A mere allegation that

the nonmoving party committed a prior material breach of the

contract     would      allow        a    party        to     litigate     that      alleged

contractual breach in an unapproved forum until the issue of

first breach ultimately was resolved.                        This ability to undermine

the   enforcement       of   forum       selection          clauses    counsels   strongly

against the adoption of Cable Products’ argument.                         See id.

      Additionally,          Cable       Products’          reliance     on    the    prior

material    breach      doctrine         is    misplaced.         This     doctrine     only

excuses      a     non-breaching              party’s        performance      when      such

obligations were dependent upon the promises that the breaching

party failed to perform.                 See Restatement (Second) of Contracts

§ 237 cmt. e (1981).          Thus, a party’s breach of one promise does

not discharge the non-breaching party’s duties with respect to

unrelated or independent promises to perform under the parties’

contract.        Id.; see also 14 Williston on Contracts § 43:1 (4th

ed. 2012).

      Here, performance under the forum selection clause was not

dependent upon the performance of any other contract provision

contained in the settlement agreement.                        In fact, the unambiguous

language    of    the   forum    selection          clause      does    not   mention    any

other term, clause, or obligation in the settlement agreement.

                                                9
Thus, adoption of Cable Products’ reasoning impermissibly would

result in rendering an independent and unambiguous provision in

the       parties’     contract      meaningless,          in   violation       of   South

Carolina law.          See Schulmeyer v. State Farm Fire & Cas. Co., 579

S.E.2d 132, 134 (S.C. 2003) (a contract’s unambiguous language

determines its force and effect); Valley Pub. Serv. Auth. v.

Beech Island Rural Cmty. Dist., 462 S.E.2d 296, 299 (S.C. Ct.

App. 1995) (each term in a contract “must be considered and

given       effect   if    possible”).         Accordingly,       because     the    forum

selection       clause         was   an     independent         promise     bearing       no

relationship to the alleged prior material breach, the “first

material breach” doctrine was inapplicable as a defense in this

case.       See 14 Williston on Contracts § 43:1.

          We also observe that Cable Products’ argument is undermined

by    its    position      concerning     the      applicable     law     governing       the

settlement       agreement.          Under     Cable     Products’      reasoning,        the

choice of law clause, which is contained in the same paragraph

as the forum selection clause, likewise would not be enforceable

as    a    result    of    the   unresolved        allegations    of    prior    material

breach.        Yet     Cable     Products     agrees     that    South     Carolina       law

governs       the    interpretation       of       the   settlement       agreement,      as

plainly       stated      by   the   choice     of   law    clause.        There     is   no

principled basis, however, for distinguishing between the choice

of law clause and the forum selection clause contained in the

                                              10
same paragraph of the settlement agreement.                             Thus, to permit

such a distinction effectively would sanction Cable Products’

attempt      to   pick       and   choose     which   portions     of    the    settlement

agreement remain enforceable.

       Next, we conclude that Cable Products committed a breach of

the forum selection clause by filing the California action.                           The

forum selection clause unambiguously provides that “any claim

asserted in any legal proceeding by one party against the other

shall be commenced and maintained in the United States District

Court for South Carolina or a South Carolina state court of

competent jurisdiction.”                (Emphasis added.)               In disregard of

this       provision,     Cable      Products       filed    the   California      action

against Monster Daddy.               Because the California action involved a

claim that was “commenced and maintained” in a legal proceeding

by   one      party     to     the   settlement       agreement,        Cable   Products,

against the other party to that agreement, Monster Daddy, we

conclude      that    Cable        Products    plainly      breached     the    settlement

agreement in this respect. *                See McGill, 672 S.E.2d at 574.

       *
       Cable Products also argued before the district court that
it did not breach the settlement agreement because the issues
raised in the California action fell outside the scope of the
settlement agreement, and because additional parties were named
in the California action that were not signatories to the
settlement agreement.    However, by failing to present these
arguments in its briefs before this Court, Cable Products has
waived them.   United States v. Powell, 666 F.3d 180, 185 n.4
(4th Cir. 2011).

                                               11
       We now turn to consider Cable Products’ contention that the

settlement agreement did not support the district court’s award

of attorneys’ fees because Monster Daddy was not a “prevailing

party,”    within       the    meaning      of    the     attorneys’     fees       clause.

According       to    Cable    Products,     its       voluntary     dismissal      of   the

California action did not affect the legal relationship between

the    parties       because   there   still       was    a   possibility      of    future

litigation of the merits of those dismissed claims.                         We disagree

with Cable Products’ argument.

       The award of attorneys’ fees incurred by Monster Daddy in

the California action was permitted under the plain language of

the attorneys’ fees clause.                 See McGill, 672 S.E.2d at 574.

That clause provided, in relevant part, that “[i]n the event of

any    breach    of    this    Agreement,        the    prevailing     party    shall     be

entitled to recover” attorneys’ fees.                         (Emphasis added.)           As

stated above, Cable Products breached the forum selection clause

in the settlement agreement by filing the California action, and

the district court based its decision to award attorneys’ fees

on that ground, finding that Cable Products’ “filing of [the

California       action]        was    in    violation          of    the      settlement

agreement.”          Therefore, Monster Daddy was the “prevailing party”

with respect to Cable Products’ breach of the forum selection

clause of the settlement agreement.                      See McGill, 672 S.E.2d at

574.

                                            12
       Cable Products’ argument incorrectly presumes that, to be a

“prevailing party,” Monster Daddy was required to prevail in the

California action on the merits of the claims asserted in that

case.     However, an award under the attorneys’ fees clause may be

made    whenever      a    party     prevails   with    respect   to   a   particular

breach of the settlement agreement, which in this case was Cable

Products’ filing of the California action.                   Thus, to qualify as

a “prevailing party” with respect to the breach of the forum

selection clause, Monster Daddy did not need to prevail on the

merits of the California action.

       Finally,       we    address     Cable   Products’     argument       that    the

district court erred in awarding to Monster Daddy its attorneys’

fees    incurred      in    the    California    action.      According      to     Cable

Products,       the       district     court    was    entitled     only     to     award

attorneys’ fees incurred in South Carolina in connection with

the motion to enforce the settlement agreement.                     We disagree.

       The settlement agreement broadly provides that “[i]n the

event of any breach . . . the prevailing party shall be entitled

to recover not only the amount of any judgment which may be

awarded in its favor but also all such other damages, costs and

expenses that may be incurred by the party, including but not

limited    to    court      costs,     reasonable      attorneys’    fees,    and    all

other reasonable costs and expenses.”                      (Emphasis added.)          We

already have held that by filing the California action, Cable

                                           13
Products breached the forum selection clause, and that Monster

Daddy was the prevailing party when the district court granted

the motion to enforce.          Thus, based on Cable Products’ breach,

Monster Daddy was entitled to recover “all such other damages,

costs and expenses [] incurred by” Monster Daddy, which included

but were not limited to “reasonable attorneys’ fees” under this

clause.

      To the extent that the attorneys’ fees clause required that

such costs and expenses relate to the opposing party’s breach of

the   settlement   agreement,      we    conclude      that    this     nexus    was

satisfied here.        The attorneys’ fees incurred by Monster Daddy

in filing its motion to transfer in the California action, like

those incurred in filing its motion to enforce the settlement

agreement   in   the    South   Carolina     action,    resulted      from      Cable

Products’ breach of the forum selection clause.                  Moreover, both

actions   were   reasonable      measures    taken     by     Monster    Daddy    to

preserve its contractual right to litigate in its chosen forum.

Therefore, the district court did not err in including in its

attorneys’ fee award the time expended by counsel for Monster

Daddy in responding to the California action.

                                        14
                              III.

     For these reasons, we affirm the district court’s award of

attorneys’ fees to Monster Daddy.

                                                       AFFIRMED

                               15