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Cintron Beverage Group, LLC v. DePersia

April 1, 2009

CINTRON BEVERAGE GROUP, LLC, PLAINTIFF,
v.
ROCCO DEPERSIA, DEFENDANT/ THIRD PARTY PLAINTIFF,
v.
A. WESLEY WYATT THIRD PARTY DEFENDANT.



The opinion of the court was delivered by: Robert F. Kelly, Sr. J.

MEMORANDUM

Presently before the Court is a Motion for Summary Judgment filed jointly by Plaintiff, Cintron Beverage Group, LLC ("Cintron"), and Third Party Defendant, A. Wesley Wyatt ("Wyatt") (collectively, the "Moving Parties"), against Defendant/Third Party Plaintiff, Rocco DePersia ("DePersia"). For the reasons set forth below, the Motion will be denied.

I. BACKGROUND

Cintron is a limited liability company that produces and distributes various beverages, one of which is an energy drink by the name of "Cintron." On July 25, 2007, Cintron filed a Complaint in this Court seeking a declaration that DePersia has no ownership interest in Cintron, and is entitled to no compensation or ownership in the company. On September 13, 2007, DePersia filed a Motion to Dismiss Cintron's Complaint for failure to join Wyatt as a necessary party. This Court denied the Motion to Dismiss by Order dated October 2, 2007.

On October 30, 2007, DePersia filed a Third Party Complaint against Wyatt, asserting claims for breach of contract, quantum meruit, and unjust enrichment. In his Complaint, DePersia alleges that a contract existed between him and Wyatt, whereby the parties jointly agreed to manufacture and distribute the energy drink, Cintron. DePersia asserts that Wyatt agreed to share an ownership interest in the company, as well as profits from the sale of the energy drink with DePersia, in exchange for the use of DePersia's band's name and image and DePersia's efforts in marketing the business.

On January 4, 2008, the Moving Parties both filed Motions to Strike the Third Party Complaint and Motions to impose sanctions upon DePersia and his attorneys. The Motions also asked this Court to issue an injunction enjoining DePersia from filing any further actions against them without leave of court. By Order dated April 14, 2008, we denied the Motion to Strike the Third Party Complaint, as well as the Motions for sanctions and for injunctive relief. The Moving Parties currently seek summary judgment with respect to Cintron's Complaint against DePersia and DePersia's Third Party Complaint against Wyatt.*fn1

This matter stems from a series of business dealings between DePersia and Wyatt. DePersia is an attorney licensed to practice in the State of New Jersey. Since 2000, he has also been the co-leader and lead singer in a local Latin band named Cintron (the "Band"), along with its co-leader, Edgardo Cintron. DePersia also owns a corporation called Shark Salsa Latin Productions, Inc. ("Shark Salsa"), which acts as the music production company for the Band, and books the Band's business. DePersia and Wyatt first began a business relationship in 2004 when DePersia sought an investor to finance the recording and promotion of a Latin jazz CD by his Band. Wyatt invested in the Band and financed the completion and promotion of a CD called "Back in the Day." In exchange for his investment, DePersia agreed to share equally with Wyatt all revenues generated by sales of the CD. This deal was never reduced to writing.

Shortly thereafter, Wyatt expressed an interest in re-branding his off-shore racing boat that was being sponsored by his company, D.F. Young, Inc. DePersia and Wyatt agreed that cross-marketing between the Band and the racing venture would be beneficial to both, so they reached an oral agreement whereby DePersia permitted Wyatt to re-brand his racing boat with the name and image of the Cintron Band. DePersia asserts that in December 2004, while attending a social dinner, DePersia and Wyatt discussed the idea of creating a consumer product that they could cross-market with the Band and the racing team. Wyatt suggested the idea of an energy drink, and they agreed to pursue all three ventures. DePersia contends that he and Wyatt orally agreed that Wyatt would invest the funds necessary for the development of the energy drink, while DePersia agreed to contribute the name and image of the Band, as well as, his marketing concepts, design concepts, and leg work to get the energy drink side of the business established. According to DePersia, both parties agreed to share in the ownership and profits from the energy drink venture. He states that in May 2005, Wyatt asked him to draft a written agreement to encompass the oral agreements reached with respect to the Cintron Band, the off-shore racing boat venture, and the development of the energy drink. DePersia drafted an agreement, but Wyatt did not sign it. (Pls.' Mot. Summ. J., Ex. E). The agreement stated, in part:

[A]ny income generated by the CINTRON CD, the theme song CD and/or the energy drink shall be allocated between the parties pursuant to a mutually accepted agreement to be entered into between the parties within 30 days of the release of the aforesaid CINTRON CD or the production of the first 50 cases of the aforesaid energy drink. . . .

Id.

In May or June 2005, Wyatt asked DePersia to approach Edgardo Cintron and acquire rights to the use of the Cintron name in connection with the energy drink, so that they could use the name freely without any objection from Edgardo Cintron. DePersia testified in his deposition that he suggested five percent (5%) of the profits a year up to a cap of $50,000, and Wyatt responded that this sounded fair to him. DePersia stated further that he drew up the document and that he and Wyatt agreed that the contract would be between Edgardo Cintron and Shark Salsa because Cintron did not exist at that point. They further agreed that once Cintron got up and going, it would assume the obligation to Edgardo Cintron. (DePersia Dep. 72:16- 73:16.)

DePersia testified that beginning in December 2005, until approximately January 2006, he was actively making efforts to develop an energy drink. He researched the market, and met with potential manufacturers and distributors. (Id. at 134:20- 136:9.) In January 2006, DePersia stated that he and Wyatt became discouraged with the progress of the development of the drink, so they decided to secure someone with experience in the beverage industry. DePersia met with Joseph Roberts ("Roberts"), the current Chief Operating Officer of Cintron. At that time, Roberts was working for another beverage company, but expressed interest in other opportunities. DePersia arranged a meeting with Wyatt and Roberts. On April 22, 2006, Wyatt sent DePersia and Roberts an email agreeing to include Roberts in the company and to give him a ten percent (10%) share in the business, and ultimately in May 2006, Roberts agreed to join the team. Thereafter, Cintron was formed on May 16, 2006.

On July 6, 2006, DePersia sent a draft agreement to counsel for Cintron. This agreement contemplated the assignment of the name "Cintron" without any restrictions. It also proposed that DePersia would receive a 10% interest in Cintron, and that Cintron would assume Shark Salsa's obligation to pay Edgardo Cintron. (Pls.' Mot. Summ. J., Ex. I.) Wyatt then sent his own draft, titled "Trademark Assignment Agreement," to DePersia on July 12, 2006. This agreement was to be made among Shark Salsa, Edgardo Cintron, and Cintron and proposed a transfer of all rights to the name "Cintron" from Shark Salsa and/or Eduardo Cintron to Cintron, and also contemplated that once Wyatt's investment in the costs for the production, promotion, and sale of the energy drink through the date of the agreement were recovered, Cintron would provide 20 % of its issued and outstanding membership interests to Shark Salsa. The draft agreement also provided that once costs were recovered by Cintron, Cintron would pay 5% of its profits, up to a cap of $50,000 to Edgardo Cintron. (Pls.' Mot. Summ. J., Ex. J.)

On July 17, 2006, DePersia responded to Wyatt's draft Trademark Assignment Agreement, and requested that the agreement be amended to state that DePersia owns 20% of Cintron, but would not be able to take a profit until Wyatt recovered his investment. DePersia also requested that the agreement reflect that the "mark cannot be sold, transferred and/or assigned, in whole or part, without written consent of Shark Salsa Latin Productions, Inc. . . . " (Pls.' Mot. Summ. J., Ex. K.) On this same day, Wyatt's attorney wrote DePersia and stated that an assignment would not be needed, as he had "completed [his] research with respect to the mark 'Cintron' and there [were] no other individuals or entities using the mark in connection with beverages." (Def.'s Resp. Mot. Summ. J., Ex. M.)

On January 15, 2007, DePersia sent Wyatt an updated agreement regarding ownership of Cintron. In such, he wrote:

[I]t is hereby reaffirmed and restated that ROCCO A. DePERSIA shall have ownership of 10% of the CINTRON BEVERAGE GROUP, LLC and that any and all documents, papers, forms and authorizations shall be executed and all other actions taken that may be necessary to complete and vest said ownership in ROCCO A. DePERSIA immediately upon execution of this Agreement. (Def.'s Resp. Mot. Summ. J., Ex. L.)

Wyatt points out that this agreement was with Cintron, DePersia and Shark Salsa, and that Wyatt was not a party to the alleged agreement. He further asserts that the parties never signed an agreement as to any of the terms outlined above, including ownership interest in Cintron, and accordingly, all of the above-referenced documents were merely negotiations between the parties. Wyatt testified that Cintron is entirely financed by him, and that, to date, he had invested twenty million dollars into the business. Wyatt further testified that, to date, Cintron has not made any profit, and he has not recovered any of his investment. (Wyatt, Dep. 229:15- 232:2.)

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 56(c) states that summary judgment is proper "if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." See Hines v. Consol. Rail Corp., 926 F.2d 262, 267 (3d Cir. 1991). The Court asks "whether the evidence presents a sufficient disagreement to require submission to the jury or whether . . . one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). The moving party has the initial burden of informing the court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "A fact is material if it could affect the outcome of the suit after applying the substantive law. Further, a dispute over a material fact must be 'genuine,' i.e., the evidence must be such 'that a reasonable jury could return a verdict in favor of the non-moving party.'" Compton v. Nat'l League of Prof'l Baseball Clubs, 995 F. Supp. 554, 561 n.14 (E.D. Pa. 1998).

Summary judgment must be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. Once the moving party has produced evidence in support of summary judgment, the non-moving party must go beyond the allegations set forth in its pleadings and counter with evidence that presents "specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e); see Big Apple BMW, Inc. v. BMW of N. Am. Inc., 974 F.2d 1358, 1362-63 (3d Cir. 1992). "More than a mere scintilla of evidence in its favor" must be presented by the non-moving party in order to overcome a summary judgment motion. Tziatzios v. U.S., 164 F.R.D. 410, 411-12 (E.D. Pa. 1996). If the court determines that there is no genuine issues of material fact, then summary judgment will be granted. Celotex, 477 U.S. at 322.

III. DISCUSSION

A. Ownership of Cintron

As stated above, Wyatt argues that a contract never existed between himself and DePersia wherein he agreed that DePersia would share in the ownership of Cintron. An enforceable contract requires an offer, acceptance, consideration and mutual meeting of the minds. Schreiber v. Olan Mills, 627 A.2d 806, 808 (Pa. Super. Ct. 1993). The offer and the acceptance must include the essential terms that both parties intend to be binding. Cosme v. Durham, No. 07-3153, 2008 WL 324020, at *3 (E.D. Pa. Feb. 4, 2008) (citing In re Estate of Hall, 731 A.2d 617, 621 (Pa. Super. Ct.1999)). The essential terms must be definite enough to provide a basis for enforcing the agreement. Cosme, 2008 WL 324020, at *3, (citing Biddle v. Johnsonbaugh, 450, 664 A.2d 159, 163 (Pa. Super. Ct. 1995)). In short, the "test for enforceability of an agreement is whether both parties have manifested an intention to be bound by its terms and whether the terms are sufficiently definite to be specifically enforced." Channel Home Ctrs v. Grossman, 795 F.2d 291, 298-99 (3d Cir.1986). Further, "'it is hornbook law that evidence of preliminary negotiations or an agreement to enter into a binding contract in the future does not alone constitute a contract.'" Id.; see also Middleton v. Realen Homes, 24 F. Supp. 2d 430, 435-36 (E.D. Pa. 1998). In other words, before preliminary negotiations ripen into contractual obligations, there must be manifested mutual assent to the terms of a bargain. McCloskey v. Novastar Mortg., Inc., No. 05-1162, 2007 WL 2407103, at *5 (E.D. Pa. Aug. 21, 2007).

Wyatt asserts that the parties went through a number of preliminary negotiations whereby they exchanged proposed terms in a number of writings, but that they never reached a meeting of the minds as to establish an enforceable contract with regard to several issues, including ownership of Cintron. As outlined in detail above, there is no question that there were a number of preliminary negotiations between Wyatt and DePersia. This is evidenced by the numerous written proposals sent back and forth between them. There is also no question that none of these documents was signed by the parties. Thus, the issue before us is whether the parties came to an enforceable oral contract regarding ownership of Cintron. It is established law in Pennsylvania that if parties agree upon essential terms and intend them to be binding, "a contract is formed even though they intend to ...


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