Souley Vegan LLC v. Deborah Webb

Background

Souley Vegan LLC brought Lanham Act claims for trademark infringement and false designation of origin, along with a California unfair-competition claim, against Deborah, Leroy, and Yachidiyel Webb. The dispute concerned Webb’s use of the name “Souly Vegan Café.” After settlement negotiations, the parties signed a Settlement Agreement on April 9, 2019. The agreement required Webb to stop using “Souly Vegan Café” and adopt “SooGood Vegan Café” within thirty days. It also provided that the Northern District of California, or the appropriate state court in Alameda County, would have exclusive jurisdiction over legal proceedings arising from or related to the agreement, and that objections to personal jurisdiction and venue were waived.

Souley Vegan alleged that Webb violated the agreement by continuing to do business as “Souly Vegan Café” and attempting to adopt “Soul Good Vegan Café.” After default was entered because Webb did not timely appear or respond to the complaint, Souley Vegan obtained a default judgment. Webb then moved to set aside the default and filed a motion to dismiss for lack of personal jurisdiction and improper venue, or alternatively to transfer the case. Souley Vegan moved to enforce the Settlement Agreement.

Motion to Set Aside Default

Webb’s motion to set aside the default was unopposed. The court therefore granted it.

Motion to Dismiss

The court denied Webb’s motion to dismiss. It held that Webb expressly waived objections to personal jurisdiction and venue in the Settlement Agreement’s forum-selection clause. The court also held that the clause applied because the remaining dispute concerned enforcement of that agreement. Webb did not argue that enforcing the clause would be unreasonable.

The court separately held that Webb implicitly waived those defenses by failing to raise them in her motion to set aside the default, which the court identified as an available opportunity to assert them. The court also declined to consider an argument concerning service on Leroy and Yachidiyel Webb because the argument was raised for the first time in Webb’s reply and was therefore waived.

Motion to Enforce the Settlement Agreement

The court granted Souley Vegan’s motion to enforce the Settlement Agreement. It stated that Webb did not deny signing the agreement or violating its terms. Instead, she asserted four defenses under California contract law: undue influence, mistake of fact, mistake of law, and fraud.

The court rejected the undue-influence defense. Webb argued that she did not personally participate in negotiations and may have been exhausted or affected by jet lag after returning from Ghana. The court concluded that these facts did not establish the required susceptibility or excessive pressure. It also found that notifying the other side about court deadlines, involving Vinston Wickers as Webb’s representative, and focusing negotiations on the restaurant’s new name did not show undue pressure.

The court rejected Webb’s mistake-of-fact defense. Although Webb acknowledged that the written agreement required her to adopt “SooGood Vegan Café,” she claimed she believed the agreement would list only names she could not use. The court held that a party’s misunderstanding of a written contract does not generally justify setting aside its obligations. The court also held that any mistake about whether Webb had legal representation was not material to the agreement and did not show a severely unfair exchange.

The court rejected Webb’s mistake-of-law defense because her claimed misunderstanding concerned whether she had a lawyer, which was a matter of fact rather than a misunderstanding of law. The court also rejected the fraud defense. Webb argued that the agreement falsely stated that she was represented by counsel, but the court concluded that she did not show the required reliance and that relying on such a statement, if she had not consulted a lawyer, would not have been reasonable.

Costs and Attorney Fees

Souley Vegan also asked for costs and attorney fees. The court did not decide that request at this stage. It stated that it would consider the request after Souley Vegan filed a properly documented motion complying with the local rules and the parties met and conferred as required.

Disposition

The court’s conclusion was: the motion to set aside default was GRANTED, the motion to dismiss was DENIED, and the motion to enforce the Settlement Agreement was GRANTED.