Champion-Cain et al v. MacDonald et al

Filing 83

ORDER Denying 72 Plaintiffs' - Counterdefendants' Joint Motion for Partial Summary Judgment. Signed by Judge Gonzalo P. Curiel on 5/10/16. (dlg)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 13 GINA CHAMPION-CAIN, an individual; LUV SURF, LP, a California limited partnership; ANI COMMERCIAL CA I, LLC, 14 Plaintiff, 12 15 ORDER DENYING PLAINTIFFS’– COUNTERDEFENDANTS’ JOINT MOTION FOR PARTIAL SUMMARY JUDGMENT v. 16 Case No.: 14-cv-2540-GPC-BLM BRIAN MACDONALD, an individual; LOVESURF, INC., a Delaware corporation, and DOES 1–10, inclusive, 17 18 [ECF No. 72] Defendant. 19 20 On January 28, 2016, Plaintiffs/Counter-Defendants Gina Champion–Cain, Luv 21 Surf LP, ANI Commercial CA I, LLC, and ANI Commercial CA II, LP (collectively 22 “Plaintiffs”) filed a motion for partial summary judgment. (ECF No. 72.) The parties have 23 fully briefed the motion. (ECF Nos. 74, 75.) The Court finds the motion suitable for 24 disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1). Upon review of 25 the moving papers, supporting documents, and applicable law, the Court DENIES 26 Plaintiffs’ motion for partial summary judgment. 27 // 28 // 1 14-cv-2540-GPC-BLM 1 REQUESTS FOR JUDICIAL NOTICE 2 Plaintiffs request judicial notice of the following documents: (1) Excerpts from 3 Thomas McNeel’s Voluntary Petition for Chapter 7 Bankruptcy filed on January 9, 2014 4 in the U.S. Bankruptcy Court for the Central District of California, Case No. 8:14–bk– 5 10165–CB (Ex. A); (2) Order of Discharge of Debtor issued on April 28, 2014 (Ex. B); 6 and (3) Order Approving Ex Parte Application to Reopen Chapter 7 Case to Administer 7 Estate Assets and to Appoint a Chapter 7 Trustee issued on October 28, 2015 (Ex. C). 8 (Plfs.’ RJN, ECF No. 72–7.) Plaintiffs additionally request that the Court take judicial 9 notice of the bankruptcy trustee’s Motion for Order Approving Trademark Sale and 10 Assignment Agreement, and Ancillary Relief (Ex. 1). (Plfs.’ Supp. Br. at 4–5, ECF No. 11 77–1.) Defendants request judicial notice of the following documents: (1) Ex Parte 12 Application to Reopen Chapter 7 Case to Administer Estate Assets and to Appoint a 13 Chapter 7 Trustee and supporting documents (Ex. A); (2) Docket of the United States 14 Bankruptcy Court for the Central District of California, Case No. 8:14-bk-10165-CB (Ex. 15 B). (Defs.’ RJN, ECF No. 74–4.) 16 Under Federal Rule of Evidence 201, a court may take notice of facts not subject to 17 reasonable dispute that are capable of accurate and ready determination by resort to sources 18 whose accuracy cannot reasonably be questioned. FED. R. EVID. 201(b). The Court finds 19 that the parties’ requests for judicial notice are properly noticeable, and therefore takes 20 judicial notice of the documents. See United States ex rel. Robinson Rancheria Citizens 21 Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992) (“[W]e ‘may take notice of 22 proceedings in other courts, both within and without the federal judicial system, if those 23 proceedings have a direct relation to matters at issue.’” (citation omitted)); Reyn's Pasta 24 Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir. 2006) (court may judicially 25 notice “court filings and other matters of public matters”). 26 FACTUAL BACKGROUND 27 As will be discussed below, the parties vehemently dispute which company first used 28 the trademark at issue. Without making any finding at this stage as to the truth of the 2 14-cv-2540-GPC-BLM 1 allegations, the Court details the parties’ claimed first uses below. 2 A. Plaintiffs’ Claimed Use of the Luv Surf Marks 3 Plaintiffs allege that they began using the brand “LUV SURF” in connection with a 4 vacation rental business in San Diego in August 2011, and had a logo designed for “LUV 5 San Diego SURF.” (Champion–Cain Decl. ¶ 2, ECF No. 18–2; Ex. I, ECF No. 19–11 at 6 22.) They began placing Luv Surf marks on merchandise in December 2011. (Id. ¶ 4.) 7 Plaintiffs promoted the products on social media and registered websites, and sold their 8 products through their online retail business and brick–and–mortar store. (Id. ¶ 8.) Plaintiff 9 Champion–Cain has multiple federal trademark registrations and applications. (Id. ¶ 9.) 10 B. Defendants’ Claimed Use of the Lovesurf Marks 11 Defendants allege that they started making hats and T–shirts labeled with a tag 12 displaying “LOVESURF” in 2010. (MacDonald Decl. ¶ 2, ECF No. 23–1.) By July 12, 13 2011, Defendants added other clothing lines using the “LOVESURF” brand, and by August 14 15, 2011, Defendants were selling clothing under the “LOVESURF” brand. (Id. ¶ 4.) In 15 December 2011, Defendants created the “HEART WAVE” logo. (Id. ¶ 6.) By December 16 28, 2011, Defendants used the “HEART WAVE” logo above the word “LoveSurf” on tags 17 of clothing for sale on the internet. (Id. ¶ 7.) Lovesurf has several trademark registrations 18 for its LOVESURF mark as well as the HEART WAVE LOVESURF logo and the HEART 19 WAVE logo. (Id. ¶ 9.) 20 C. The Luv Surf Love Mark 21 Thomas McNeel registered the LOVE SURF LOVE trademark with the U.S. Patent 22 and Trademark Office on July 19, 2005 (U.S. Reg. No. 2974608). (Plfs.’ Notice of 23 Lodgment of Exhibits (“NOL”), Ex. 2, ECF No. 72–5.) 24 On January 9, 2014, Mr. McNeel filed a voluntary petition for personal bankruptcy 25 in the United States Bankruptcy Court for the Central District of California. (RJN, Ex. A, 26 ECF No. 72–4.) Mr. McNeel did not disclose the LOVE SURF LOVE mark on his 27 schedules of assets as listed in Schedule B. (See id. at 14 (instructing petitioner to list 28 “[p]atents, copyrights, and other intellectual property”).) Mr. McNeel responded “NONE.” 3 14-cv-2540-GPC-BLM 1 (Id.) On April 28, 2014, the bankruptcy court entered a discharge and no assets were 2 administered. (RJN, Ex. B, ECF No. 72–9.) 3 In July 2015, Defendant MacDonald contacted Mr. McNeel to discuss purchasing 4 the Love Surf Love mark. (NOL, Ex. 1 at 16–19, ECF No. 72–4.) On July 18, 2015, Mr. 5 McNeel assigned “all right, title and interest” in the LOVE SURF LOVE trademark to 6 Lovesurf, Inc. in exchange for $10,000. (NOL, Ex. 3, ECF No. 72–6.) Lovesurf filed the 7 assignment with the USPTO and began to advertise and sell goods under the LOVE SURF 8 LOVE trademark. (Defs.’ NOL, Ex. 2, ECF No. 74–8.) 9 D. Recent Bankruptcy Court Developments 10 On August 24, 2015 Peter C. Anderson, United States Bankruptcy Trustee, filed an 11 Ex Parte Application to Reopen Chapter 7 Case with the Bankruptcy Court for the Central 12 District of California. (Defs.’ RJN, Ex. A, ECF No. 74–5). The Ex Parte Application 13 asserted that McNeel had failed to list two trademarks on his schedule of assets, one of 14 which was the “Love Surf Love” mark. (Id. at 2.) On October 28, 2015 the Bankruptcy 15 Court approved the application to reopen. (Plfs.’ RJN, Ex. C, ECF No. 72–7.) Waneta 16 M.A. Kosmala (“Trustee”) was appointed as Chapter 7 trustee of Mr. McNeel’s bankruptcy 17 estate. (Defs.’ NOL, Ex. 1, ECF No. 74–8.) 18 On April 5, 2016, counsel for the Trustee filed a motion in the Bankruptcy Court for 19 the Central District of California seeking an order “Approving a Trademark Sale and 20 Assignment Agreement Between Trustee and American National Investments, Inc.” (Plfs.’ 21 Supp. Br., Ex. 1, ECF No. 77–1.) The Trustee filed therewith an assignment agreement 22 entered between the Trustee and Plaintiff American National Investments, Inc. (“ANI”) for 23 the sale of the Love Surf Love trademark, subject to an “overbidding” process. (Id., Ex. 24 B, ECF No. 77–1.)1 25 // 26 27 28 1 Plaintiffs are instructed to file declarations and exhibits as separate entries on CM/ECF for future filings, such that a declaration and exhibits are not in one bulk file. 4 14-cv-2540-GPC-BLM 1 RELEVANT PROCEDURAL HISTORY 2 On January 28, 2016, Plaintiffs filed the instant motion for partial summary 3 judgment. (Mot. Partial Summ. J., ECF No. 72.) Defendants filed an opposition on March 4 4, 2016 (ECF No. 73) and Plaintiffs filed a reply on March 18, 2016 (ECF No. 75). On 5 April 5, 2016, the Court submitted Plaintiffs’ motion on the papers. (See ECF No. 76.) On 6 April 6, 2016, Plaintiffs filed an ex parte motion for leave to file additional briefing in light 7 of recent developments in the bankruptcy proceedings, which the Court granted on April 8 21, 2016. (ECF Nos. 77, 80.) 9 LEGAL STANDARD 10 Federal Rule of Civil Procedure 56 empowers the Court to enter summary judgment 11 on factually unsupported claims or defenses, and thereby “secure the just, speedy and 12 inexpensive determination of every action.” Celotex Corp. v. Catrett, 477 U.S. 317, 325, 13 327 (1986). Summary judgment is appropriate if the “pleadings, depositions, answers to 14 interrogatories, and admissions on file, together with the affidavits, if any, show that there 15 is no genuine issue as to any material fact and that the moving party is entitled to judgment 16 as a matter of law.” FED. R. CIV. P. 56(c). A fact is material when it affects the outcome 17 of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 18 The moving party bears the initial burden of demonstrating the absence of any 19 genuine issues of material fact. Celotex Corp., 477 U.S. at 323. The moving party can 20 satisfy this burden by demonstrating that the nonmoving party failed to make a showing 21 sufficient to establish an element of his or her claim on which that party will bear the burden 22 of proof at trial. Id. at 322-23. If the moving party fails to bear the initial burden, summary 23 judgment must be denied and the court need not consider the nonmoving party’s evidence. 24 Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60 (1970). 25 Once the moving party has satisfied this burden, the nonmoving party cannot rest on 26 the mere allegations or denials of his pleading, but must “go beyond the pleadings and by 27 her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on 28 file’ designate ‘specific facts showing that there is a genuine issue for trial.’” Celotex, 477 5 14-cv-2540-GPC-BLM 1 U.S. at 324. If the non-moving party fails to make a sufficient showing of an element of 2 its case, the moving party is entitled to judgment as a matter of law. Id. at 325. “Where 3 the record taken as a whole could not lead a rational trier of fact to find for the nonmoving 4 party, there is no ‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio 5 Corp., 475 U.S. 574, 587 (1986). In making this determination, the court must “view[] the 6 evidence in the light most favorable to the nonmoving party.” Fontana v. Haskin, 262 F.3d 7 871, 876 (9th Cir. 2001). The Court does not engage in credibility determinations, 8 weighing of evidence, or drawing of legitimate inferences from the facts; these functions 9 are for the trier of fact. Anderson, 477 U.S. at 255. 10 DISCUSSION 11 Plaintiffs’ motion for partial summary judgment seeks an order declaring void the 12 purported trademark assignment from Mr. McNeel to Defendants on the grounds that Mr. 13 McNeel did not own the property at the time of the transaction. Plaintiffs argue that the 14 trademark remained a part of Mr. McNeel’s bankruptcy estate by operation of law, with 15 the Chapter 7 trustee retaining exclusive ownership, because Mr. McNeel did not disclose 16 the trademark in his schedules. (Mot. Partial Summ. J. at 6–8, ECF No. 72.) Specifically, 17 Plaintiffs contend that property of the bankruptcy estate remains in the estate until and 18 unless it is abandoned, and property that is not scheduled is not abandoned and remains 19 property of the bankruptcy estate. (Id. at 6–7 (citing 11 U.S.C. §§ 544(c)–(d).) As such, 20 Plaintiffs contend that the Trustee owns the LOVE SURF LOVE mark because it was never 21 revested to Mr. McNeel. (Id.) 22 Defendants respond that the reopening of a bankruptcy case is not a proper basis for 23 determining whether a debtor’s sale of an unscheduled asset is valid. (Opp’n at 4, ECF 24 No. 74.) Specifically, Defendants argue that such a determination can only be made by the 25 bankruptcy court upon application by the Trustee through an adversary proceeding under 26 11 U.S.C. § 549 governing post–petition transactions. (Id.) Defendants maintain that as a 27 good faith purchaser, Lovesurf currently remains the rightful owner of the trademark unless 28 and until the bankruptcy court declares otherwise. (Id. at 6.) Defendants further argue that 6 14-cv-2540-GPC-BLM 1 even if the bankruptcy court later finds that the transfer was voidable, summary judgment 2 on the validity of the transfer by this Court is premature. (Id. at 8.) In their supplemental 3 brief, Plaintiffs argue that the Trustee’s April 6, 2016 motion seeking an order approving 4 the sale of the trademark to Plaintiff ANI further undermines Defendants’ claim to 5 ownership of the trademark and supports partial summary judgment. (Supp. Br. at 2–3. 6 ECF No. 77–1.) 7 The Court finds that, at this juncture, there exists a genuine dispute of material facts 8 relating to the ownership of the LOVE SURF LOVE trademark. The Trustee’s re–opening 9 of bankruptcy proceedings and filing of a Motion for Order Approving Trademark Sale 10 and Assignment Agreement, and Ancillary Relief (Plfs.’ Supp. Br. at 4–5, Ex. 1, ECF No. 11 77–1) undercuts Defendants’ position that Lovesurf, as a bona fide purchaser, retains 12 ownership of the trademark. However, the Trustee’s filing of the motion does not establish 13 as a matter of law that Mr. McNeel’s assignment to Defendants was void. 14 The Trustee’s position is that because Mr. McNeel failed to schedule the trademark, 15 it was not abandoned when the case was closed and remained property of the estate. (Id. 16 at 4 (citing 11 U.S.C. § 554(c), (d)).) The hearing on Trustee’s motion is set before the 17 bankruptcy court on May 24, 2016. As the Trustee points out, it appears that the [e]state 18 now has the LOVE SURF LOVE trademark “and/or an avoidance action relating to that 19 trademark, and a potential damage claim for infringement by multiple parties” and 20 “[m]ultiple actions are likely to be necessary to sort out the [e]state’s interests.” (Id. at 5.) 21 The matter is properly before the bankruptcy court and summary judgment is premature 22 prior to the bankruptcy court’s resolution of questions of ownership. The Court therefore 23 DENIES Plaintiffs’ motion for partial summary judgment. 24 // 25 // 26 // 27 // 28 // 7 14-cv-2540-GPC-BLM 1 2 3 4 5 CONCLUSION In light of the foregoing, the Court DENIES Plaintiffs’ motion for summary judgment without prejudice. IT IS SO ORDERED. Dated: May 10, 2016 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 14-cv-2540-GPC-BLM

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