United States District Court, D. Massachusetts
HARVEY BERAM, as Administrator of the Estate of Sandy Beram, Plaintiff,
CEACO, INC.; CAROL J. GLAZER; and CYNTHIA A. BASQUE, Defendants.
MEMORANDUM AND ORDER
B. Saris Chief United States District Judge.
Beram,  a puzzle inventor, brought this suit
against Ceaco, Inc. (“Ceaco”), its President,
Carol Glazer, and its CFO, Cynthia Basque, alleging that they
failed to make contractually required royalty payments on
puzzle product designs.
the complaint is time-barred, and other claims are without
merit. Further, Glazer and Basque are not personally liable
for the contract claims. Ceaco's motion to dismiss
(Docket No. 11) is ALLOWED in part and
DENIED in part. Glazer and Basque's motion to
dismiss (Docket No. 13) is ALLOWED in part and
DENIED in part.
purposes of the motion to dismiss, the facts are taken as
alleged in the complaint. In re Loestrin 24 Fe Antitrust
Litig., 814 F.3d 538, 545 (1st Cir. 2016). The contract
between Beram and Ceaco, which is attached to the complaint,
is also considered because it is incorporated by reference in
the complaint and central to Beram's claim.
Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir. 2008).
Beram was a puzzle inventor. On November 2, 1993, she and
Ceaco entered into a contract by which Ceaco licensed several
of Beram's puzzles for manufacture and sale. The covered
products were listed in Schedule 1 of the contract, which
initially referenced two puzzle designs: “Fuzzy
Grip” and “Search for Small Stuff.”
Additional puzzle designs were added to Schedule 1 in
subsequent amendments, for a total of fourteen licensed
puzzle designs. One of those additional puzzle designs was
“Puzzle Stix, ” which was added to Schedule 1 on
September 3, 1999.
contract contained the following provision regarding royalty
3. Royalties and Other Payments. Subject to the terms and
conditions of this Agreement, CEACO, Inc. agrees to pay to
Sandy Beram, for each type of Merchandise, the Merchandise
Royalty Rate applicable to such Merchandise multiplied by the
Selling Price (as defined below) for each item of such
Merchandise sold in the Territory by CEACO Inc. and all
sublicensees (“Royalty Payments”). As used in
this Agreement, (i) the “Selling Price” shall
mean the greater of (1) the actual sales price for such item
if sold on a wholesale basis, and (2) if the item is sold
other than on a wholesale basis, (x) the actual sales price
less (y) returns, reasonable and customary discounts, sales
tax, freight and insurance; and (ii) any product
incorporating an Item will be considered Merchandise for
purposes of this Agreement, and any product will be deemed to
incorporate an Item when it is based in whole or in part on
the Item or any part thereof. Sales shall be deemed to have
been made when invoiced or shipped, whichever occurs first.
1 provided the royalty rates for each of the puzzle designs.
section 5 of the contract, Ceaco agreed to provide Beram with
quarterly reports listing selling prices, gross sales,
merchandise royalty rates, and royalty payments for her
section 16 of the contract, the effective term of the
contract is one hundred years following the death of Sandy
Beram, unless the contract is terminated earlier. The
contract provided for three early termination scenarios.
First, if a party breaches the agreement, the nonbreaching
party may terminate the agreement if the breaching party does
not cure the breach upon notice. Second, Beram may terminate
the contract if aggregate royalty payments for four
consecutive quarters are less than the “minimum annual
royalty payment” amounts set forth for each product in
Schedule 1. Third, the contract may automatically terminate
upon certain conditions not present here.
alleges that the defendants have long failed to submit
payment reports or to pay total royalties, including
purportedly required minimum royalty payments. Beram also
alleges that Ceaco “fraudulently concealed” its
books and records relating to sales and royalties. Beram
further alleges that “[i]n or about the 2000's,
” Ceaco began to reduce and ultimately eliminate the
royalty payments. Upon inquiry, Glazer told Beram that sales
of her puzzles were being ended.
also alleges that between 2011 and 2015, Ceaco sold a product
named “Puzzlestix” that Ceaco attributed to a
different inventor. Beram did not receive royalty payments
for sales of this product.
filed the complaint on March 23, 2016, listing fourteen
causes of action:
(1) Copyright infringement by Ceaco and Glazer,
(2) Trademark infringement by Ceaco and Glazer,
(3) Breach of contract by all defendants,
(4) Breach of implied covenant of good faith and fair
dealing by all defendants,
(5) Promissory estoppel/detrimental reliance by all
(6) Unjust enrichment by Ceaco and Glazer,
(7) Conversion by Ceaco and Glazer,
(8) Misappropriation by Ceaco and ...