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