Court Opinion

ID: 9857206
Source: CourtListenerOpinion
Date Created: 2023-09-24 14:01:10.579571+00
Date Added: 2024-06-11T09:38:11.576720
License: Public Domain

SACK, Circuit Judge,
concurring.
I concur in the panel’s opinion with respect to JA Apparel Corp.’s Lanham Act claim. I concur in the result with respect to the contract claim, but depart from the panel’s reasoning. While I agree that the term “names”' — -as it appears in ¶ 1.1(a)(A) of the Agreement of Purchase and Sale dated June 16, 2000 (“Sale Agreement”)— is ambiguous, I would, respectfully, reach that conclusion by a different route.
In ¶ 1.1(a), Joseph Abboud promised to “sell, convey, transfer, assign and deliver to [JA Apparel] ... all of [his] right, title and interest in and to,” inter alia,
(A) The names, trademarks, trade names, service marks, logos, insignias and designations identified on Schedule l.l(a)(A), and all trademark registrations and applications therefor, and the goodwill related thereto (collectively, the “Trademarks”) ... and all other Intellectual Property (as hereinafter defined).
(B) All licenses to use the Trademarks granted by [Abboud]....
(C) All rights to use and apply for the registration of new trade names, trademarks, service marks, logos, insignias and designations containing the words “Joseph Abboud,” “designed by Joseph Abboud,” “by Joseph Abboud,” “JOE” or “JA,” or anything similar to or derivative thereof, either alone or in conjunction with other words or symbols (collectively, the “New Trademarks”), for any and all products and services.
*404Sale Agreement ¶ 1.1(a) (underline in original). Schedule 1.1(a)(A) to the Sale Agreement contains a five-page list of trademarks — the words “Trademark Report by Mark” appear at the top left corner of each page — -including, for each listed mark, information such as the countries of registration, reference numbers, dates filed, and registration numbers. A sixth page consists of a “Filing Receipt for Trademark Application” for a mark containing “the words JOSEPH ABBOUD.” The question before us is whether the term “names” in ¶ 1.1(a)(A) is ambiguous.
JA Apparel asserts that ¶ 1.1(a)(A) unambiguously conveys to it, through that term, rights to Abboud’s personal name, at least for commercial purposes. Abboud insists that it unambiguously conveys rights to Abboud’s trade and service marks only. The parties have staked the expense of a trial and an appeal on their positions. The district court initially thought both interpretations were plausible enough to warrant a trial on the contract claim. After a bench trial, however, the court decided ¶ 1.1(a)(A) was not ambiguous, agreeing with JA Apparel’s interpretation of the words at issue. This rendered the “fairly extensive” extrinsic evidence the court had received “legally irrelevant.” JA Apparel Corp. v. Abboud, 591 F.Supp.2d 306, 318 & n. 9 (S.D.N.Y. 2008).
I. Applicable New York Law
I would settle the question whether ¶ 1.1(a)(A) is ambiguous by reference to several familiar rules of contract interpretation used to determine “the manifest purpose” of the parties to an agreement. In re Herzog, 301 N.Y. 127, 135, 93 N.E.2d 336, 339 (1950). When an agreement is “clear” and “complete,” that purpose is determined by reference only to the contract’s terms: “Evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing.” W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157, 162, 566 N.E.2d 639, 642, 565 N.Y.S.2d 440, 443 (1990). When a contract term is “reasonably susceptible to more than one interpretation,” however, it is ambiguous as to the parties’ intent. Andy Warhol Found., for Visual Arts, Inc. v. Fed. Ins. Co., 189 F.3d 208, 215 (2d Cir.1999).
Whether a term is ambiguous is a matter of law for the court to resolve. W.W.W. Assocs., 77 N.Y.2d at 162, 566 N.E.2d at 642, 565 N.Y.S.2d at 443.1 If the court identifies an ambiguity, the controlling meaning is determined by application of principles of interpretation and construction under the controlling state law. See, e.g., Wallace v. 600 Partners Co., 86 N.Y.2d 543, 548, 658 N.E.2d 715, 717, 634 N.Y.S.2d 669, 671 (1995); Rentways, Inc. v. O’Neill Milk & Cream Co., 308 N.Y. 342, 347, 126 N.E.2d 271, 273 (1955). Then, only if necessary, extrinsic evidence of the parties’ intent is employed. See W.W.W. Assocs., 77 N.Y.2d at 163, 566 N.E.2d at 642, 565 N.Y.S.2d at 443.
It is a generally accepted proposition that where the terms of a writing are plain and unambiguous, there is no room for interpretation or construction.... However, this formulation may be technically overbroad, in the sense that the interpretation of a contract requires an initial determination of whether the contract is ambiguous ... and this determination itself involves an assessment of the contract’s meaning.
*405Richard A. Lord, 11 Williston on Contracts § 30:4 (4th ed.2008). At least some principles of interpretation therefore ordinarily guide the inquiry into whether a contract term is ambiguous.
New York courts conducting the inquiry typically apply three rules of interpretation.
First, they determine ambiguity by “ex-amin[ing] the entire contract and considering] the relation of the parties and the circumstances under which it was executed,” interpreting “Particular words ... not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby.” Kass v. Kass, 91 N.Y.2d 554, 566, 696 N.E.2d 174, 180-81, 673 N.Y.S.2d 350, 356-57 (1998) (quoting Atwater & Co. v. Panama R.R. Co., 246 N.Y. 519, 524, 159 N.E. 418, 419 (1927)); see also Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co., 375 F.3d 168, 173 (2d Cir.2004) (“An ambiguity exists where the terms of a contract could suggest more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.” (internal quotation marks omitted)).
Second, the New York courts apply the rule that each term is to be assigned its “fair and reasonable meaning.” Sutton v. E. River Sav. Bank, 55 N.Y.2d 550, 555, 435 N.E.2d 1075, 1078, 450 N.Y.S.2d 460, 463 (1982) (internal quotation marks omitted); see also Bethlehem Steel Co. v. Turner Constr. Co., 2 N.Y.2d 456, 459, 141 N.E.2d 590, 593, 161 N.Y.S.2d 90, 93 (1957) (“reasonable and ordinary meaning”).
Third, they apply the rule “that a court should not adopt an interpretation which will operate to leave a provision of a contract without force and effect,” Corhill Corp. v. S.D. Plants, Inc., 9 N.Y.2d 595, 599, 176 N.E.2d 37, 38, 217 N.Y.S.2d 1, 3 (1961) (citation, ellipsis, and internal quotation marks omitted), i.e., the rule against surplusage.
For example, in R/S Associates v. New York Job Development Authority, 98 N.Y.2d 29, 771 N.E.2d 240, 744 N.Y.S.2d 358 (2002), an opinion by then-New York Court of Appeals Judge Wesley, the Court of Appeals addressed “the interpretation of the term ‘effective cost of funds’ in a loan agreement” which provided that the rate to be charged by the lender for the loan in question “ ‘may be revised from time to time but will not exceed one and one half (1)6%) percent over [the lender’s] effective cost of funds.’ ” Id. at 31, 32, 771 N.E.2d at 241, 744 N.Y.S.2d at 359. The purchaser and the lender disputed whether the phrase “effective cost of funds” included' — -in addition to the interest on the bonds issued to finance the loan and the direct costs of issuance — “the cost of defaults by other borrowers.” Id. at 32, 771 N.E.2d at 241, 744 N.Y.S.2d at 359. The purchaser argued that the phrase unambiguously excluded the cost of defaults, the lender argued that the phrase unambiguously included it. See id.
The Court of Appeals concluded that the phrase was unambiguous and reasonably susceptible to only the lender’s proposed meaning. It reached that conclusion by applying the reasonable meaning rule and the rule against surplusage:
Under its ordinary usage, the ‘effective’ cost of the funds means the ‘actual’ cost of securing such funds for a specific loan (see, e.g., 5 Oxford English Dictionary 80 [2d ed 1989] ...). Regardless of borrower defaults, the [lender]’s funding mechanism required it to repay the underlying bond when due. Thus, the ‘actual’ or ‘effective’ cost of the funds loaned by *406the [lender] necessarily included the interest it had to pay to the bondholders, the cost of issuing the bond, and the cost of defaults by the borrowers who received loans from bond proceeds. Any other interpretation of this agreement would ignore the import of “effective” in modifying “cost of funds. ”
Id. at 33, 771 N.E.2d at 242, 744 N.Y.S.2d at 360 (some emphases added, some emphases in original omitted).
The ambiguity inquiry commonly involves the application of these three rules. See also Golden Gate Yacht Club v. Societe Nautique De Geneve, 12 N.Y.3d 248, 257, 907 N.E.2d 276, 879 N.Y.S.2d 363, 369 (2009) (“Taken as a whole, we conclude that the settlor intended to link the annual regatta requirement to the other eligibility requirements.... Any other interpretation would render the annual regatta requirement a nullity.... We conclude there is no ambiguity as to the annual regatta clause at issue.”); S. Road Assocs., LLC v. IBM Corp., 4 N.Y.3d 272, 277-78, 826 N.E.2d 806, 809, 793 N.Y.S.2d 835, 838 (2005) (concluding that a lease read “as a whole” reflects that “the term ‘premises’ refers only to the interior space” of the leased real property, because “[t]he lease repeatedly mentions the ‘premises’ separately from the water tower, appurtenances, land, parking lot [,] and building,” which language “would be superfluous” if the term “premises” covered those exteri- or areas); Kass, 91 N.Y.2d at 568, 696 N.E.2d at 181, 673 N.Y.S.2d at 357 (rejecting appellant’s proposed reading of consent clause because “[a]ppellant’s construction ignores ... words that also must be given meaning”); Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 869 N.Y.S.2d 511, 516-17, 60 A.D.3d 61, 67 (1st Dep’t 2008) (“In the instant case, the ordinary and natural meaning of the [contract’s] words [is] dispositive.... A plain reading ... makes clear that 10 years is the maximum term of the contract at issue .... We note that clear contractual language does not become ambiguous simply because the parties to the litigation argue different interpretations.”).2
II. Application to ¶ 1.1(a)(A)
Again, ¶ 1.1(a)(A) conveys to the plaintiff
[t]he names, trademarks, trade names, service marks, logos, insignias and designations identified on Schedule 1.1(a)(A), and all trademark registrations and applications therefor, and the goodwill related thereto (collectively the “Trademarks”) ... and all other Intellectual Property (as hereinafter defined).
Sale Agreement ¶ 1.1(a)(A) (underline in original). The parties each contend that the term “names” in ¶ 1.1(a)(A) means something different. The rules of interpretation applied by the New York courts support both parties’ proposed meanings. It is for this reason that I would conclude the term “names,” as used in the Sale Agreement, is ambiguous.

A. JA Apparel’s Proposed Meaning

1. Application of the Rules of Interpretation. The plaintiff argues that the term “names” in ¶ 1.1(a)(A) denotes Joseph Abboud’s personal name itself, not a mark related to his name. As the district court concluded, application of the rule against surplusage makes this interpretation reasonable. Pursuant to that rule, the term *407“names” must be given a meaning different from the meaning of the other properties listed by ¶ 1.1(a)(A); otherwise the term “would be superfluous.” S. Road Assocs., 4 N.Y.3d at 278, 826 N.E.2d at 809, 793 N.Y.S.2d at 838. So the term must refer to intellectual property other than that which is subsequently referred to in the paragraph, i.e., other than a “trademark [],” for example, or a “trade name[ ]” or “service mark[ ].” Sale Agreement ¶ 1.1(a)(A).3 From the ordinary usage of the term “name,” it is reasonable to conclude that the other intellectual property in question is Abboud’s personal name. See The American Heritage Dictionary of the English Language 1167 (4th ed.2000) (defining “name” principally as “[a] word or words by which an entity is designated and distinguished from others”).4
Reading the Sale Agreement as a whole supports this result. Paragraph 1.1(a)(C), quoted in full at the outset of this opinion, contains a list of intellectual property strikingly similar to that in ¶ 1.1(a)(A) but omits the term “names” with which the list in ¶ 1.1(a)(A) begins. See Sale Agreement ¶ 1.1(a)(0) (conveying “[a]ll rights to use and apply for the registration of new trade names, trademarks, service marks, logos, insignias and designations containing [‘Joseph Abboud’ and similar words]”). That “names” appears in one list but not the other suggests that the parties and their counsel took deliberate care to include the term in ¶ 1.1(a)(A) so as to convey an interest in something other than trademarks, trade names, and the like.
2. The Panel Majority’s Analysis. The panel majority concludes that the term “names” is reasonably susceptible to JA Apparel’s proposed interpretation because the term “is unadorned and ... the name ‘Joseph Abboud’ is used many times in Schedule 1.1(a)(A).” Supra at 398. I *408find both reasons problematic. To be sure, the term “names” in ¶ 1.1(a)(A) is “unadorned” in the sense that it has no modifiers. But that does not alone render either party’s proposed meaning a reasonable one.
Schedule 1.1(a)(A), attached to the Sale Agreement and referred to in ¶ 1.1(a)(A), does not support JA Apparel’s reading, because the name “Joseph Abboud,” as a personal name, appears nowhere in the schedule. The schedule is a list of marks. The heading of each page reads: “Trademark Report by Mark.” The schedule lists categories of marks by name in bold-face capital letters, with each mark in the category set forth along with its registration information. So, while the schedule contains, among many other things, the words “Joseph Abboud,” those words are mentioned only as a mark or a part of a mark, reflecting a trademark property related to “Joseph Abboud,” not Joseph Abboud’s personal name or whatever property right he may have in it.

B. Abboud’s Proposed Meaning

1. Application of the Rules of Interpretation. According to Abboud, the term “names” in ¶ 1.1(a)(A) denotes only trademarks or service marks and therefore does not convey rights to his personal name. The ordinary-meaning rule yields Abboud’s interpretation. The interpretation flows not from the ordinary usage of the term “names,” which, of course, can be used to refer to personal names and property interests in them, but from the appearance of the term in context: “[t]he names, trademarks, trade names, service marks, logos, insignias and designations identified on Schedule 1.1(a)(A).” Sale Agreement ¶ 1.1(a)(A) (underline omitted). Because, as noted, Schedule 1.1(a)(A) appears to identify only marks, not personal names, and the schedule “identifie[s]” what is conveyed by the Sale Agreement in ¶ 1.1(a)(A), it seems to me reasonable to conclude that what is conveyed by ¶ 1.1(a)(A) is only marks, and not the personal name of Joseph Abboud or his property rights in it. The text in ¶ 1.1(a)(A) therefore is reasonably susceptible to Abboud’s proposed interpretation.
The rule against surplusage supports this reading. The phrase “Trademark Report by Mark,” which is the page heading of the first five pages of Schedule 1.1(a)(A), must be given meaning. And if it is to mean nothing more than, as it says, a set of marks, then it cannot also mean personal names. If, departing from Abboud’s interpretation, one does not restrict “names” and its surrounding terms to the property identified by Schedule 1.1(a)(A), and does not interpret that property to include only marks, one thereby “ignore[s] ... words that ... must be given meaning,” Kass, 91 N.Y.2d at 568, 696 N.E.2d at 181, 673 N.Y.S.2d at 357, albeit words in a schedule and not the body of the agreement.5
This application of the ordinary-meaning rule and the rule against surplusage is bolstered by ¶ 3.6 of the contract, which states that “Schedule 1.1(a)(A) sets forth a list of all of the trademark registrations, service mark registrations and applications and copyright registrations and applications currently used by [Abboud] in connection with the Trademarks.” Sale Agreement ¶ 3.6 (underline omitted). *409That list omits any mention of personal names.
2. The Panel Majority’s Analysis. The panel majority looks to Schedule 1.1(a)(A), as the text of ¶ 1.1(a)(A) instructs, and concludes that its listing “plainly did not exhaust Abboud’s right to use his name in the future.” Supra at 398. I agree. But I am less certain about the panel’s view that “brand names [i.e., marks] are similar to the items immediately following the word ‘names’ in [¶ 1.1(a)(A) ], to wit ‘trade names, service marks, logos [and] insignias.’ ” Supra at 398. I think that the rule against surplus-age requires the term “names” to have a meaning different from the words in that list.6 The panel majority also observes that the defined term “the ‘Trademarks’ ” — which collectively identifies property conveyed in ¶ 1.1(a)(A) — “would seem to connote existing or pending uses.” Id. But I would think that drafters define terms in contracts in order to avoid speculative meanings. The term “the ‘Trademarks,’” as defined, “connote[s]” nothing more than the set of terms it is defined to mean; it tells us nothing about how to interpret the terms that define it, including the term “names.”7
Finally, the Court finds significance in the language of ¶ 1.1(a)(0), which conveys
[a]ll rights to use and apply for the registration of new trade names, trademarks, service marks, logos, insignias and designations containing the words “Joseph Abboud,” “designed by Joseph Abboud,” “by Joseph Abboud,” “JOE” or “JA,” or anything similar thereto or derivative thereof, either alone or in conjunction with other words or symbols (collectively, the “New Trademarks”), for any and all products or services.
Sale Agreement ¶ 1.1(a)(0) (emphasis added). I do not see how this text tells us whether Abboud transferred the rights to his personal name by including the term “names” in ¶ 1.1(a)(A). The term is absent from ¶ 1.1(a)(0). If ¶ 1.1(a)(A) did transfer to JA Apparel the right to use Abboud’s personal name along with the listed trademarks, ¶ 1.1(a)(0) would still be necessary — or at least advisable — to ensure the transfer of the separate right to use and apply for “new trade names, trademarks, service marks, logos, insignias and designations containing the words ‘Joseph Abboud’ [and associated combinations].” The rights in question — the right to use a personal name for commercial purposes and the right to apply for and use a new trademark containing the words of that name — are different and independent.
It seems to me that if Joseph Abboud sold the right to use his personal name as a personal name, the purchaser could open and run and advertise a clothing line called “Joseph Abboud Men.” And if he already owned the mark “Joseph Abboud Men,” and sold it, the purchaser would then have the right to use that term as a mark. But I do not think it necessarily follows from either hypothetical transaction that the *410purchaser could then have the exclusive right to apply for and use, as marks, new trademarks made up of or derived from the words Joseph Abboud, e.g., “Joseph Abboud Women.” Without an explicit sale of the right to apply for and use, as marks, new marks similar to or including his personal name, I should think both Abboud and the purchaser might each apply for such marks, and the rightful owner of that property would be determined by application of ordinary principles of trademark law.
For these reasons, the drafter’s decision to cover the use of the name Joseph Abboud in the context of new trademarks in ¶ 1.1(a)(0) does not seem to me to indicate that the parties meant not to transfer the use of the name along with existing trademarks in ¶ 1.1(a)(A).

C. The Ambiguity

In my view, the rules of interpretation do not conclusively establish the reasonableness of one party’s interpretation over the other in this case; they yield both interpretations as plausible results. And, as I have suggested, I think that both proposed resolutions do at least some violence to the rules of interpretation. The rules therefore leave us with an ambiguity that they are insufficient to resolve. I therefore agree with the panel majority that the district court should now consider whether extrinsic evidence will shed light on the matter, and if so, employ it to determine the meaning of the language in dispute.
III. Conclusion
For the foregoing reasons, I concur in the result reached by the panel majority.

. ''[C]lear contractual language does not become ambiguous simply because the parties to the litigation argue different interpretations.” Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 869 N.Y.S.2d 511, 517, 60 A.D.3d 61, 67 (1st Dep't 2008).

. . The rule against surplusage is said to be a rule "of preference in interpretation,” Restatement (Second) of Contracts § 203 (1981), which applies only after it is established that a . term has more than one reasonable interpretation, see id. cmt. a. As the cited cases illustrate, however, New York courts nonetheless apply the rule in the inquiry whether a term is ambiguous.

. Abboud is therefore wrong to assert that ¶ 1.1(a)(A) "do[es] not mention, manifest or express any intent to sell the exclusive right to use Abboud’s name, other than as a trademark.” Defs.’ Br. 31.

. It also seems to me that although the rule against surplusage is said to apply not only to contract provisions, see Corhill Corp., 9 N.Y.2d at 599, 176 N.E.2d at 38, 217 N.Y.S.2d at 3, but to particular words within a contract provision, see, e.g., Kass, 91 N.Y.2d at 568, 696 N.E.2d at 181, 673 N.Y.S.2d at 357, the rule should nonetheless be applied with a grain or two of salt when examining a list of words having similar or even overlapping meaning in a commercial agreement. Such an itemization of terms may reflect an intent to occupy a field of meaning, not to separate it into differentiated parts. Indeed, this is a common — perhaps all-too-familiar — technique used in drafting agreements, commercial and otherwise. With this technique, words are used more like the brush strokes of a house painter than of those of a portrait painter — each intended principally to ensure that the surface is covered, not to convey a separate piece of information. See, e.g., Sale Agreement ¶ 1.1(a) (providing that “the Sellers shall sell, convey, transfer, assign, and deliver” the "right, title and interest in and to” the properties in question); In re Luxottica Group S.p.A. Sec. Litig., No. CV 01-3285(JBW)(MDG), 2005 WL 3046686, *1, 2005 U.S. Dist. LEXIS 27765, *11 (E.D.N.Y. Nov. 15, 2005) (in the case of a specified event, "the Stipulation, including any amendments) thereof, ... shall be null and void, of no further force or effect, and without prejudice to any party, and may not be introduced as evidence or referred to in any actions or proceedings by any person or entity, and each party shall be restored to his, her or its respective position as it existed prior to the execution of the Stipulation"); In re Host Am. Corp. Sec. Litig., No. 05-CV-1250 (VLB), 2008 U.S. Dist. LEXIS 94194, *17-*18 (D.Conn. Nov. 19, 2008) (similar) (not available on Westlaw). A "house painter” analysis of ¶ 1.1(a)(A) also supports JA Apparel’s reading of "names” as meaning something different from "trademarks”: listing all possible types of the mentioned intellectual property may be taken to signal an intention not to restrict the denotation of the listed terms to one type only.

. Thus, the rule against surplusage counsels both in favor of interpreting the term "names” as denoting property other than the trademarks, service marks, and the other types of property listed in ¶ 1.1(a)(A) and in favor of interpreting the term as merely an instance of the more general category of trademark as set forth in Schedule 1.1(a)(A).

. If the panel is suggesting that Abboud’s proposed meaning is supported by application of the canon noscitur a sociis, pursuant to which "a word is given more precise content by the neighboring words with which it is associated,” United States v. Williams, - U.S. -, 128 S.Ct. 1830, 1839, 170 L.Ed.2d 650 (2008); see also Harris v. Allstate Ins. Co., 309 N.Y. 72, 76, 127 N.E.2d 816, 818 (1955) (applying canon), I disagree. Even if the canon applies in the ambiguity inquiry, under the majority’s reasoning it would stand for the proposition that the term "names" should denote "trademarks” and therefore have an identical denotation to the terms with which it appears. I am aware of no such application of noscitur a sociis.

. Schedule 1.1(a)(A) employs the terms "Trademark” and "Mark,” but not the specially defined term "the ‘Trademarks.’ ” Abboud’s interpretation of the schedule is therefore unaffected by the defined term.