Ledo Pizza System, Inc. v. Ledo Restaurant, Inc., No. 10-1480 (4th Cir. 2011)

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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1480 LEDO PIZZA SYSTEM, INCORPORATED; LEDO PIZZA CARRYOUTS, LTD.; ROBERT M. BEALL; MARGARET K. BEALL; ROBERT G. BEALL; TROY L. BEALL; JAMES B. BEALL; GARTH E. BEALL; ROBERT W. BEALL; THELMA W. BEALL; MILDRED BEALL; THELMA B. BEALL, Plaintiffs Appellants, v. LEDO RESTAURANT, INCORPORATED; HUNTINGTON CITY RESTAURANT, INCORPORATED, trading as T.J. Elliott s; HUNTINGTON CITY ENTERPRISES LLC, trading as Expressions Catering; THOMAS E. MARCOS, JR.; THOMAS E. MARCOS, SR.; JAMES L. MARCOS; EILEEN J. MARCOS, Defendants Appellees. Appeal from the United States District Court for the District of Maryland, at Baltimore. Deborah K. Chasanow, Chief District Judge. (1:06-cv-03177-DKC) Submitted: November 24, 2010 Decided: January 7, 2011 Before KING, KEENAN, and WYNN, Circuit Judges. Affirmed in part, vacated in part, and remanded by unpublished per curiam opinion. Brent M. Ahalt, MCNAMEE, HOSEA, JERNIGAN, KIM, GREENAN & LYNCH, P.A., Greenbelt, Maryland, for Appellants. Cary J. Hansel, Veronica Byam Nannis, JOSEPH, GREENWALD Greenbelt, Maryland, for Appellees. & LAAKE, P.A., Unpublished opinions are not binding precedent in this circuit. 2 PER CURIAM: Ledo Pizza System, Inc., Ledo Pizza Carryouts, Ltd., Robert M. Beall, Margaret K. Beall, Robert G. Beall, Troy L. Beall, James B. Beall, Garth E. Beall, Robert W. Beall, Thelma W. Beall, Mildred Beall, and Thelma B. Beall ( the Bealls or the Appellants ), filed this lawsuit against Ledo Restaurant, Inc., T.J. Elliott s d/b/a Huntington Restaurant, Expressions Restaurant, Huntington City Catering, Thomas E. James Marcos ( the Marcos, Sr., and breach of contract, competition. City L. trademark Inc., d/b/a Enterprises Marcos Jr., Thomas Marcoses ), violations, LLC, E. alleging and unfair The district court found two minor instances of breach of contract and awarded the Bealls two dollars in nominal damages. The court found for the Marcoses on all other claims. The Bealls noted a timely appeal. The Bealls interpretation first of license the challenge the agreement on district summary court s judgment. They argue that, under the terms of the agreement, the Marcoses are limited to advertising restaurants. The particular being as Bealls within point violative to of the the the four walls Marcoses license of their websites agreement. in We disagree. We review a district court order granting summary judgment de novo, viewing the facts and inferences drawn from 3 them in the light most favorable to the nonmoving Robinson v. Clipse, 602 F.3d 605, 607 (4th Cir. 2010). party. Contract construction is also a question of law that this court reviews de novo. 377 F.3d Seabulk Offshore, Ltd. v. American Home Assur. Co., 408, 418 (4th Cir. 2004). [S]ummary judgment is appropriate when the contract in question is unambiguous or when an ambiguity can be extrinsic evidence. definitively resolved by reference to Washington Metro. Area Transit Auth. v. Potomac Inv. Prop., Inc., 476 F.3d 231, 235 (4th Cir. 2007). By their own terms, the agreements here are governed by Maryland law. We have recognized that Maryland follows the principle of the objective interpretation of contracts. Potomac Inv. Prop., 476 F.3d at 235 (quoting Walker v. Dep t of Human Res., 842 A.2d 53, 61 (Md. 2004)). Under the objective theory of contracts [courts] look at what a reasonable person in the same position would have understood as the meaning of the agreement. Walton v. Mariner Health of Md., Inc., 894 A.2d 584, 594 (Md. 2006). The relevant provisions of the license agreement provide that the Marcoses shall not make use in any way of any of the Marks, Recipes, or the Ledo Pizza pizza [sic] in any manner except as specified. The Marcoses are permitted to sell at retail from the Adelphi Location or from the Bowie Area Locations salad dressing, tomato sauce or any other finished retail food products under the 4 names Ledo Restaurant or Original Ledo Restaurant , provided that the term Restaurant in any logos, labelling, advertising or marketing materials . . . shall be featured at least as prominently and styled (if at all) in the same manner as the term Ledo. The license agreement also permits the Marcoses to use derivatives of the names Ledo Restaurant and Original Ledo Restaurant in connection with the operation of their restaurants. We agree with the district court that the agreements in question did not restrict the Marcoses to advertising within the four walls of their restaurants. license agreement focuses on two issues: The language of the first, restricting the Marcoses to selling products under the Ledo mark only at the Adelphi and Bowie locations; and second, ensuring that the mark is presented or styled in a particular way. The relevant language does not support the Bealls attempt to enlarge the geographic restrictions to encompass advertising. * Next, the Bealls argue that the district court erred when it granted summary judgment as to Thomas Marcos, Sr., and dismissed him from the case. They argue that Marcos, Sr. is liable the as a co-promisor on * agreements, and because he Because we agree with the district court s conclusion that the Marcoses advertising activities did not breach the agreements, we decline to consider whether the Bealls claim is barred by laches. 5 expressly agreed to be held jointly and severally liable, citing Traylor v. Grafton, 332 A.2d 651, 672 (Md. 1975). ( When two or more promisors agree to pay a sum of money under a contract the amount promised is the promise of all and the promisee is entitled to a joint judgment against them, or judgments against them severally. ). The Bealls also point to language in the agreements that states that the Marcoses jointly and severally agree to indemnify arguments, we find the Bealls. them to Having lack merit, considered and we these affirm the district court on this issue as well. The Bealls next contend that the district court erred in failing to find the Marcoses in breach of contract for the actions of Expressions; in so arguing the Bealls articles 5.1(c) and 5.2(b) of the settlement agreement. point to Because this issue was decided after a bench trial, we review factual findings for clear error and conclusions contract construction, de novo. of law, including Roanoke Cement Co. v. Falk Corp., 413 F.3d 431, 433 (4th Cir. 2005). Article 5.2 of the settlement agreement outlines the restrictions applicable to the Marcoses business activities. Section (b) provides that none of the successors directly or facility at Marcoses, Ledo Restaurant nor any of their or assigns shall open or participate indirectly in any carryout or restaurant any location whatsoever utilizing in any 6 way the name Ledo or any derivative or expansion thereof or the Ledo Pizza recipe. Article 5.2(a) and article 5.1(c) limit the effect of this restriction, permitting the Marcoses to use Ledo intellectual property in connection with Ledo Restaurant and one or more restaurants, carryouts and/or any retail store in the Bowie area. The trademark agreement permits use of the Ledo mark for direct retail sale . . . to the general public for sit-down or carry-out restaurant sales sold at Ledo Restaurant or at any restaurant located in the Bowie area. There is no dispute that Expressions was not permitted to use Ledo intellectual property. Together, the Marcoses own sixty percent of Expressions and, with this ownership interest, they have, at least indirectly, participated in a business using the Ledo mark without authorization. Moreover, while Expressions originally operated out of T.J. Elliott s in Bowie, it later moved to Owings, Maryland. Even if Expressions had remained at the Bowie location, its catering operations would violate the agreements whenever it used the Ledo mark, because the products would not have been sold at a retail store for sit-down or carry-out. Accordingly, we find that Expressions use of the Ledo mark constituted a violation of the agreements by the Marcoses. Therefore, we 7 vacate this portion of the district court s decision and remand it to allow the district court to consider damages on this claim. Finally, we address the Bealls contention that the district Garth court Beall erred were not in concluding protected by that communications attorney-client with privilege. We review attorney-client privilege determinations by district courts under a two-fold standard of review. Stables, 148 F.3d 379, 382 (4th Cir. 1998). Hawkins v. When the district court s decision rests on legal principles, it is reviewed de novo, but findings when of Additionally, the fact, district we review [e]videntiary harmless error analysis. 185 (4th Cir. 2010), court s ruling clear for rulings below error. are . given no cert. indication . on Id. subject to United States v. Roe, 606 F.3d 180, denied, ___ S. 4115418 (U.S. Nov. 15, 2010) (No. 10-7014). have . rests that they were Ct. ___, 2010 WL Because the Bealls prejudiced by that ruling, they are entitled to no relief on this claim. For court in the part, foregoing vacate in reasons, part, we affirm the district and remand for further proceedings consistent with this opinion. We dispense with oral argument because the facts and legal contentions are adequately 8 presented in the materials before the court and argument would not aid the decisional process. AFFIRMED IN PART, VACATED IN PART, AND REMANDED 9

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