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Mossimo Holdings, LLC v. Haralambus

United States District Court, C.D. California

April 4, 2017

HARRY HARALAMBUS, ET AL., Defendants, THE LAMBUS CORPORATION, Third-party plaintiff,
VICTOR SIASAT, et al., Third-Party Defendants.



         Presently before the court is Third-Party Defendant Victor Siasat's Motion for Summary Judgment. After considering the parties' submissions and hearing oral argument, the court GRANTS the motion and adopts the following Order.

         I. BACKGROUND

         Third-Party Plaintiff The Lambus Corporation (“TLC”) is an entity partly-owned and operated by Harry Haralambus. (Declaration of Harry Haralambus ¶ 4.) For approximately the past two decades, TLC, along with several other corporate entities that Haralambus operates, has had a business relationship with an apparel company called Mossimo concerning trademarks in the MOSSIMO brand.[1] During a similar period, Haralambus also had a business relationship with an apparel manufacturing and distribution company called Promark Industries, Inc. (“Promark”). (Declaration of Victor Siasat ¶ 5.) Across numerous agreements, which will be addressed in greater detail below, Promark acquired a sublicense to the MOSSIMO mark from Haralambus for use in connection with the manufacture and sale of branded apparel in the Philippines.

         At some point, relations between Haralambus and Mossimo broke down and Mossimo sued Haralambus for breach of contract, conversion, fraud, and other related claims in July 2014. (See Dkt. 35.) The gravamen of Mossimo's suit was that Haralambus assigned his companies' rights in the MOSSIMO mark to various shell companies and then collected royalties from sublicenses without Mossimo's knowledge or consent and without making required royalty payments to Mossimo. (Id. ¶¶ 4-8.) These unauthorized sublicenses allegedly included the deal with Promark. (Id. ¶ 32.) These allegations were never adjudicated and, instead, the parties entered into a settlement and Mossimo dismissed its suit. (See Dkts. 92, 97.) Before the case settled, in September 2014, Mossimo directly granted Promark a license to use the MOSSIMO mark in the Philippines. (Declaration of Adamson Bactat, Ex. 5.) Also while the suit was pending, TLC filed a Third-Party Complaint against Victor Siasat and Iconix Brand Group. (Dkt. 57.) According to TLC, when relations had begun to break down between Haralambus and Mossimo, the parties discussed granting TLC a new exclusive license in exchange for an advance payment of $100, 000. (Id. ¶ 10.) Based on those discussions, TLC made the payment but alleges that the draft licensing agreement Iconix later provided to TLC did not represent the parties' prior understanding. (Id. ¶ 14.) According to TLC, this was because Siasat had interceded with Iconix to interfere with TLC's contractual relations and prospective economic advantage. (Id. ¶¶ 40-49.)

         A. Haralambus's Relationship with Siasat and Promark Industries

         In 1997, Victor Siasat first introduced Harry Haralambus to Promark Industries. (Siasat Decl. ¶ 5; Haralambus Decl. ¶ 8.) Siasat made the introduction because, at the time, Haralambus was looking for a firm to manufacture and distribute apparel bearing the “MOSSIMO” brand mark in the Philippines. (Id.) Although the parties dispute the precise relationship between Siasat and Promark, it is undisputed that the owner, or one of the owners, of Promark was a relative of Siasat's and that Siasat had facilitated business for Promark on various occasions. (Declaration of Harry Haralambus ¶ 8; Siasat Decl. ¶ 14.) Haralambus also alleged that Siasat was a co-owner of Promark. (Haralambus Decl. ¶ 8.)

         On January 1, 1998, Promark entered into a Master License Agreement with Sole Supply, Inc. (“Sole Supply”)-a company owned and operated by Haralambus. (Bacatat Decl. ¶ 3, Ex. 1 [Promark Master License Agreement.) Sole Supply represented in this agreement that it held “all licensing right, title and interest” to the relevant trademarks in the Philippines pursuant to a separate licensing agreement with Mosssimo Inc. (Id. at 1; id. § 4.1.) Under the terms of the Promark Master License Agreement, Promark was granted a non-exclusive right to use the MOSSIMO mark in connection with manufacturing “anywhere in the world” and an exclusive right to use the mark in connection with sale and distribution of branded products in the Philippines for a period of five years and four months (expiring on April 30, 2003). (Id. §§ 2.1, 15.1.) The agreement also included a one-time renewal option for five years, which Promark exercised. (Id. § 15.2; Bactat Decl. ¶ 5.) From January 1, 1998 until April 30, 2008, Promark made royalty payments to Sole Supply and TLC-as noted above, another entity owned and operated by Haralambus-totaling $1.08 million for the use of the MOSSIMO marks in the Philippines. (Bactat Decl. ¶ 6; Haralambus Decl. ¶ 13.)

         In May 2008, immediately after the agreement between Promark and Sole Supply expired, Promark entered into a new licensing agreement with Onward Pacific (the “Second Promark License Agreement.”) (Bactat Decl. ¶ 7, Ex. 2.) Onward Pacific was another entity that Haralambus directed and partially-owned. Under this agreement, Promark was again granted the right to manufacture apparel with the MOSSIMO mark anywhere in the world and sell licensed products in the Philippines. (Id. § 2.1). The term of the agreement was five years, expiring on April 30, 2013. (Id. §§ 3.1, 3.2, 3.3.) Although the Second Promark License Agreement was made with Onward Pacific at least some of the royalty payments under the agreement were sent to TLC. (See Declaration of Susan Baker, Ex. 2 (Haralambus Depo. 186:18-187:3.) Between 2010 and 2013, Promark asserts that it transferred at least $926, 187 to TLC. (Bactat Decl. ¶ 11.) Immediately after the Second Promark License Agreement expired, Promark entered into a third license agreement for the MOSSIMO marks with Onward Pacific on May 1, 2013. (Bactat Decl. ¶ 10, Ex. 3 [Third Promark License Agreement].)

         B. Haralambus's Relationship with Mossimo

         The parties dispute the precise status of the Mossimo marks in the Philippines when Sole Supply and Promark entered into the Promark Master License Agreement in 1998. Haralambus contends that prior undisclosed agreements between Mossimo and Sole Supply dating back to 1996 gave Sole Supply an exclusive right to license the marks in the Phillipines, while Promark questions whether Sole Supply or any other entity owned by Haralambus had any such right at that time. (Compare Haralambus Decl. ¶ 4 with Siasat Mot. Summ. J (“Mot.”) 4-5.) What the undisputed evidence does show is that Mossimo, Inc. licensed the MOSSIMO mark to Beyond Blue, Inc. (“Beyond Blue”)- another Haralambus owned entity-on April 1, 2001. (Dkt. 35, Ex. 1.) According to that agreement, Mossimo granted Beyond Blue an exclusive license to use the MOSSIMO trademark in Hong Kong, Japan, Korea, Singapore, and the Philippines. (Id. at 1) The initial term of the agreement was five years and Beyond Blue was given an option to renew for another five years. (Id. §§ 2.1, 2.2.) Under the terms of the agreement, Beyond Blue had the right to sublicense the mark but was required to secure Mossimo's prior written consent and pay Mossimo seventy percent of all royalties from any sublicense agreements. (Id. §§ 1.2, 5.1.) On July 6, 2007, Mossimo and Beyond Blue executed and Amendment to the License Agreement, which terminated Beyond Blue's license to use the MOSSIMO trademark everywhere but the Philippines where Beyond Blue retained an exclusive license to the marks until December 31, 2012. (Dkt. 35, Ex. 2.) Under the terms of the Amended License Agreement, Beyond Blue was permitted to assign its interests and rights to Onward Pacific-as noted above, a company Haralambus partly-owned and directed. (Id. § 7.) The Amended License Agreement provided for certain guaranteed minimum royalties and maintained the same rights and responsibilities for sublicensing the mark. (Id. §§ 4, 10.)

         The three assertions Siasat makes about this account are that Haralambus never informed Mossimo of its sublicense agreement with Promark, Haralambus never paid Mossimo the required portion of sublicense royalties, and that Haralambus, and his entities, had lost their rights to the MOSSIMO mark at least five months prior to Promark's third license agreement with Onward Pacific. Haralambus disputes each of these claims. As to the first two, Haralambus asserts that Mossimo was aware of the arrangement and was not owed any additional royalty payments. As to the final point, Haralambus notes that the rights to license the MOSSIMO mark in the Philippines derived from the alleged 1996 agreement with Sole Supply and not any subsequent agreement. (Haralambus Decl. ¶¶ 19, 27.) Thus, any claimed expiration of licensing rights is irrelevant.

         C. The Parties' Accounts Intersect

         After entering into the Amended License Agreement with Haralambus, Mossimo alleges that Onward Pacific failed to make the guaranteed minimum royalty payments. (Dkt. 35 ¶ 44.) Mossimo contacted Haralambus about the issue and, after some discussion, Mossimo alleges that Haralambus had TLC transfer $100, 000 to Mossimo to partially satisfy the owed royalty payments. (Id. ¶ 45.) During this period, Haralambus agrees that the parties were engaged in discussions about the MOSSIMO marks. (Haralambus Decl. ¶ 23.) In Haralambus's view, he did not owe any minimum guaranteed royalty payments because of the alleged agreement with Sole Supply that gave that company the rights to the MOSSIMO mark in the Philippines. (Id.) Nonetheless, Haralambus concedes making a $100, 000 payment to Mossimo. (Id. ¶ 24.) Haralambus asserts that this payment was made as “part of an overall far-reaching settlement between the parties . . . which was to be consummated in writing.” (Id.) Subsequent to this payment, in September 2013, Haralambus received a draft agreement between Onward Pacific and Iconix. (Id. ¶ 28, Ex. 7.) This draft agreement was never executed.

         Around this time, two other relevant events transpired. First, Mossimo entered into a new joint venture on September 30, 2013 with an affiliate of the Global Brands Group (“Global Brands”)-an independent company that no party or third-party claims an ownership or interest in-that granted Global Brands the exclusive right to exploit and sublicense the MOSSIMO brand trademarks in a number of Southeast Asian Companies including the Philippines. (Declaration of Jared Margolis ¶ 3.)

         Second, also in September 2013, Siasat met with representatives from Mossimo. (Siasat Decl.¶ 6.) Siasat states that the meeting was to discuss the possibility of acquiring the licensing rights for certain other brands not at issue here. (Id. ¶ 6.) As Mossimo was now operated by Iconix, Siasat claims he did not even know that this meeting was with a Mossimo representative and he claims that he never discussed the Mossimo mark. (Id.) Haralambus disputes this assertion and contends that Siasat spoke about the MOSSIMO mark on this occasion. (Haralambus Decl. ¶ 27.) Subsequently, in December 2013, Siasat met with an individual named Jason Rabin who was a representative of the Global Brands Group. (Id. ¶ 11.) Siasat claims that this was the first of multiple interactions with Mossimo representatives who told Siasat that Promark was using the MOSSIMO mark without authorization in the Philippines. (Id. ΒΆΒΆ 11, 12.) During these interactions, Siasat claims he turned over Promark's licensing agreements with the various entities Haralambus operated, as well ...

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