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Chemeon Surface Technology, LLC v. Metalast International, Inc.

United States District Court, D. Nevada

March 15, 2017




         I. SUMMARY

         The dispute stems from the breakup of a business and disagreement over the terms of a subsequent settlement agreement. Before the Court is Defendants-Counterclaimants David M. Semas (“Semas”) and Metalast International, Inc.’s (“MII”) (collectively, “Defendants”) Motion for Partial Summary Judgment on Counterclaim for Breach of Contract (“Motion”). (ECF No. 130.) Counter-defendants Chemeon Surface Technology, LLC, Dean S. Meiling and Madylon Meiling (collectively, “Chemeon”) have responded (ECF No. 137) and Defendants have replied (ECF No. 147).


         The facts as relevant to the claim for breach of contract raised in the Motion are as follows. MII managed Metalast International, LLC (“the LLC”) when the LLC was placed into receivership in April 2013. (ECF No. 137-1 at 5.) Chemeon’s predecessor acquired the assets of the LLC in November 2013. (ECF No. 137-6.) Semas filed for bankruptcy the next month. (ECF No. 137 at 5.) The LLC filed creditor claims against Semas and initiated an adversary action.[1] (Id.)

         In the adversary action, the parties participated in a court mediated settlement conference on January 27, 2015. (ECF No. 130-1.) The parties reached a settlement, the terms of which were placed on the record (“Settlement Agreement”). (ECF No. 130-1.) The terms at issue in the Settlement Agreement are as follows (“Disputed Provision”):

That there is a trademark regarding the name Metalast. There is a dispute regarding ownership. That dispute has been resolved as follows:
Metalast Surface Technology through the Meilings will continue to use the mark for 90 days following entry of the order approving the settlement agreement by Judge Beesley, if he does approve it. At the end of that 90-day period, Metalast Surface Technology, the Meilings, and any other entity in which the Meilings have an interest, will no longer be able to use the name Metalast in any fashion or manner whatsoever. Following that 90 days, the mark will be owned by Mr. and Mrs. Semas, or any entity in which they choose to transfer that mark.

(ECF No. 130-1 at 6:24-7:11.) On March 11, 2015, Judge Beesely approved the settlement, triggering the 90 period for use of “the mark” by the Meilings. (ECF No. 130 at 3.) At the end of that period on June 10, 2015, Chemeon “continued to use the ‘Metalast’ name on Chemeon’s website, marking materials” and other company documents, and referred to Chemeon as “formerly Metalast.” (Id. at 3.)

         After Chemeon initiated this action, Defendants asserted counterclaims. (ECF No. 51.) Defendants seek summary judgment on its counterclaim for breach of the Settlement Agreement.


         “The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court.” Nw. Motorcycle Ass’n v. U.S. Dep’t of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). Summary judgment is appropriate when the pleadings, the discovery and disclosure materials on file, and any affidavits “show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986). In evaluating a summary judgment motion, a court views all facts and draws all inferences in the light most favorable to the nonmoving party. Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986). “The usual rule of interpretation of contracts is to read provisions so that they harmonize with each other, not contradict each other. That task of construction is for the court.” Peterson v. Minidoka Cty. Sch. Dist. No. 331, 118 F.3d 1351, 1359 (9th Cir.), amended by 132 F.3d 1258 (9th Cir. 1997).

         In opposing summary judgment, Chemeon does not suggest that any disputed facts exist to preclude summary judgment. In fact, the parties agree that the Settlement Agreement is unambiguous and may be construed as a matter of law, but they disagree as to its construction. (ECF No. 137 at 8; ECF No. 147 at 2.) Defendants contend the Settlement Agreement is unambiguous that Chemeon is absolutely prohibited from using the “name Metalast in any fashion or manner whatsoever” after June 10, 2015. (ECF No. 130 at 4-6.) Chemeon counters that Defendants’ absolute ban construction is not supported by the express language of the Settlement Agreement, which addresses the “name” of the company and not the “mark.” (ECF No. 137 at 10.) Chemeon further argues that even if the Settlement Agreement supports Defendants’ absolute ban interpretation, such a construction ignores existing Ninth Circuit law, leads to an unfair result and infringes on Chemeon’s First Amendment right to make truthful commercial speech. (Id. at 11-19.) Chemeon contends the Settlement Agreement does not prohibit Chemeon from referring to its past association with Metalast. The Court agrees with Chemeon that the Settlement Agreement does not impose an absolute ban on the use of the Metalast name and accordingly denies Defendants’ Motion as presented.

         Interpretation of a contract is a question of law. See Shelton v. Shelton, 78 P.3d 507, 510 (Nev. 2003). “A basic rule of contract interpretation is that ‘[e]very word must be given effect if at all possible.’” Musser v. Bank of Am., 964 P.2d 51, 54 (Nev. 1998) (alteration in original) (quoting Royal Indem. Co. v. Special Serv. Supply Co., 413 P.2d 500, 502 (Nev. 1966)). Additionally, when construing a contract, a court should consider the contract as a whole and “should not interpret a contract so as to make meaningless its provisions.” Phillips v. Mercer, 579 P.2d 174, 176 (Nev. 1978). Under contract law generally, when a term is unambiguous, a court must construe it from the language contained within it. Chwialkowski v. Sachs, 834 P.2d 405, 406 (Nev. 1992). A contract is unambiguous if it is not susceptible to more than one interpretation. See Margrave v. Dermody Props., 878 P.2d 291, 293 (Nev. 1994). A court’s goal is to ...

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