WINE & CANVAS DEVELOPMENT LLC v. WEISSER et al

Filing 510

FINDINGS OF FACT AND CONCLUSIONS OF LAW ; Default Judgment is entered against Defendant YN Canvas CA, LLC in the amount of $5,088.39 on WNC's breach of contract claim. WNC is entitled to recover its costs of this action from Defaulted De fendants Theodore Weisser, YN Canvas CA, LLC, and Weisser Management Group, LLC. Pursuant to Local Rule 54-1, WNC must submit its bill of costs within fourteen (14) days of the date of this Order. Counsel is encouraged to review Seventh Circuit ca se law and the federal statutes governing costs. WNC is also granted injunctive relief, and the Defaulted Defendants are enjoined as set forth in this Entry. Final judgment shall be entered accordingly. Signed by Judge Tanya Walton Pratt on 5/1/2015.(CKM)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
WINE & CANVAS DEVELOPMENT LLC,
Plaintiff,
v.
THEODORE WEISSER,
YN CANVAS CA, LLC, and
WEISSER MANAGEMENT GROUP, LLC,
Defendants.

)
)
)
)
)
)
)
)
)
)
)

Case No. 1:11-cv-01598-TWP-DKL

FINDINGS OF FACT AND CONCLUSIONS OF LAW
FOLLOWING THE MARCH 2, 2015 DAMAGES HEARING
This matter is before the Court for a decision on damages sought by Plaintiff Wine &
Canvas Development LLC (“WNC”) against Defaulted Defendants Theodore Weisser
(“Weisser”), YN Canvas CA, LLC (“YN Canvas”), and Weisser Management Group, LLC
(“Weisser Management”) (collectively “Defaulted Defendants”). WNC’s Amended Complaint
alleged violations of the Lanham Act for trademark infringement and other violations, and
requested Injunctive Relief and Damages. Following an entry of default, a hearing was held on
March 2, 2015, wherein the parties were permitted to present evidence, make argument and submit
proposed findings of fact and conclusions of law. The Court now finds as follows:
I.

BACKGROUND

Although the procedural and factual backgrounds pertaining to this action have been set
forth in previous orders, a summary in this Entry is warranted. The complaint in this matter was
filed in state court in November 2011, and the action was removed to federal court on December
2, 2011. WNC filed an Amended Complaint on September 4, 2012 (Filing No. 36) against Weisser,
Christopher Muylle (“Muylle”), YN Canvas and Weisser Management. WNC’s Amended

Complaint asserts the following claims: Count 1 - Trademark Infringement; Count 2 - False
Designation of Origin; Count 3 - Trademark Dilution; Count 4 - Sales of Counterfeit Items; Count
5 - Unfair Competition; Count 6 - Bad Faith, Tortious Conduct, Abuse of Process, et al.; Count 7
- Civil Action Under the Indiana Crime Victims Act; Count 8 - Breach/Equitable Relief; and Count
9 - Fraud.
Initially, Weisser was represented by counsel, however, his attorneys withdrew their
appearance on October 4, 2012, and the Court directed the Clerk to add Weisser as a pro se litigant
(Filing No. 48). On October 22, 2012, Weisser filed an Answer to the Amended Complaint and
asserted counterclaims against WNC for violation of California’s franchise code and for
cancellation of the WNC trademark registration (Filing No. 51). Thereafter, Weisser virtually
abandoned this case. Throughout his self-representation, Weisser disregarded many court orders
and procedures, and missed numerous deadlines.
In January 2013, Weisser’s Co-Defendant, Christopher Muylle, filed an Amended Answer
and asserted counterclaims against WNC and third party claims against Anthony Scott (“Scott”),
Tamara McCracken (“Ms. McCracken”), and Donald McCracken (“Mr. McCracken”) (Filing No.
66). The counterclaims and third party claims were two counts of violations of California’s
franchise code, cancellation of the WNC trademark registration, and abuse of process. WNC then
filed third party counterclaims against Muylle, Weisser, YN Canvas, and Weisser Management on
June 18, 2013 (Filing No. 101).
In September 2013, the Court granted WNC’s motions to dismiss Muylle’s two counts of
violations of California’s franchise code as well as Weisser’s counterclaim for violation of
California’s franchise code (Filing No. 144; Filing No. 145 (adopted by Filing No. 179 and Filing
No. 184)). On November 22, 2013, a Clerk’s Entry of Default was entered against Weisser, YN

2

Canvas, and Weisser Management in their capacity as third party counterclaim defendants and
against YN Canvas and Weisser Management in their capacity as defendants for their failure to
file responsive pleadings (Filing No. 210).
Then on August 15, 2014, in two separate Orders on summary judgment motions, the Court
dismissed Muylle’s and Weisser’s claims to cancel the WNC trademark registration (Filing No.
341; Filing No. 342). In the summary judgment Order as to Muylle, the Court also dismissed all
of the claims asserted by WNC against Muylle with the exception of the trademark infringement
claim and the false designation of origin claim after November 18, 2011. Muylle’s claim for abuse
of process against WNC, Scott, Ms. McCracken, and Mr. McCracken also survived summary
judgment (Filing No. 341).
The final pretrial conference was held on October 22, 2014, and Weisser chose not to
participate. On November 10, 2014, one week prior to the jury trial of this matter, the Court found
Weisser in default as to liability for the claims asserted against him in WNC’s Amended Complaint
because of his failure to participate in the litigation and to comply with numerous court orders
(Filing No. 408).
As a result of the Entries of Default and Orders on the Motions to Dismiss and Motions for
Summary Judgment, the only claims remaining for trial were WNC’s trademark infringement
claim and false designation of origin claim against Muylle after November 18, 2011, and Muylle’s
counterclaim for abuse of process against WNC, Scott, Ms. McCracken, and Mr. McCracken. The
Court informed the parties that a separate hearing after the trial would be held to determine
damages as to the Defaulted Defendants (Filing No. 411).
From November 17 through November 20, 2014, the Court conducted a jury trial on
WNC’s trademark claims against Muylle and Muylle’s counterclaim for abuse of process against

3

WNC, Scott, Ms. McCracken, and Mr. McCracken. The jury returned a verdict in favor of Muylle
on WNC’s claims for trademark infringement and false designation of origin. The jury also
returned a verdict for Muylle on his counterclaim and third party claim for abuse of process,
awarding Muylle $81,000.00 against WNC, $81,000.00 against Scott, $81,000.00 against Ms.
McCracken, and $27,000.00 against Mr. McCracken (Filing No. 444).
After the jury trial, Weisser hired an attorney and filed a Motion to Set Aside the Judgment
of Default that had been entered against him (Filing No. 449), and that Motion was denied (Filing
No. 464). The Court set a hearing to determine damages as to the Defaulted Defendants. The
damages hearing was held on March 2, 2015. Having considered testimony, arguments and
evidence, the Court now makes the following findings of fact and conclusions of law pursuant to
Federal Rule of Civil Procedure 52.
II.

FINDINGS OF FACT

Prior to this lawsuit and the events that led up to it, Scott and Weisser had been friends
since childhood, for almost 24 years. Scott is an Indiana resident, a founder of WNC, and the
president of WNC. Scott’s business and life partner, Ms. McCracken, is also an Indiana resident,
a founder of WNC, and the art director of WNC. Her father, third party defendant Mr. McCracken,
is an Indiana resident, a founder of WNC, and the sole owner of WNC. Weisser is now a resident
of California but was a resident of Alabama before he moved to California with Muylle to help
open a San Francisco location for WNC’s expansion.
WNC is a limited liability company organized and existing under the laws of Indiana with
its principal office located in Hamilton County, Indiana. WNC is a widely popular venture that
offers artistic instruction and entertainment combined with alcoholic beverages offered in a variety
of venues, including public and private settings, corporate events, special occasions, and classroom

4

settings. WNC has acquired substantial goodwill among consumers, and as a result of extensive
sales and advertising—especially through social media marketing—the WNC mark is recognized.
In January 2011, Scott and WNC hired Weisser, through his company Weisser
Management, as a consultant to develop franchise, license, partnership, confidentiality, noncompete, membership interest, and other business documents for WNC’s business expansion.
Although Weisser is not a lawyer, Scott asked him to assist in WNC’s franchise and business
development efforts, which Weisser did from approximately January to August 2011. In March
2011, under the direction of WNC, Weisser assisted in developing a licensing package to offer to
potential partners of WNC. The full licensing package consisted of (1) an LLC Membership
Interest Purchase Agreement (Tr. Ex. 400), (2) an Option to Purchase Ownership Interest (Tr. Ex.
401), (3) an Operating Agreement (Tr. Ex. 402), (4) a Subscription to Membership Interest (Tr.
Ex. 403), (5) a Membership Redemption Agreement and Covenant Not to Compete (Tr. Ex. 404),
and (6) an Intellectual Property License Agreement (Tr. Ex. 411).
After Weisser had worked on developing WNC’s licensing package, in April 2011,
discussions ensued between WNC and Weisser about the expansion of WNC to San Francisco,
California. In July 2011, Weisser discussed with WNC that a mutual friend, Muylle, would be his
partner in opening a WNC location in San Francisco. On July 5, 2011, Weisser and Muylle formed
YN Canvas to operate the to-be-licensed WNC location in San Francisco.
YN Canvas is a limited liability company organized and existing under the laws of Nevada,
and it is managed by Weisser and Muylle. YN Canvas was organized to offer artistic instruction
and entertainment as licensed by WNC. Weisser Management is a limited liability company
organized and existing under the laws of Alabama. Weisser Management is operated by its sole
member, Theodore Weisser, to, among other things, help manage YN Canvas.

5

Throughout July 2011, WNC and Weisser continued discussing the business arrangement
for the San Francisco operation, but no mutual agreement was reached regarding the structure of
the business relationship. Meanwhile, Weisser and Muylle continued to make preparations to move
to San Francisco and start a WNC operation in California. WNC repeatedly asked Weisser and
Muylle for a signed written agreement to govern their business arrangement.
On July 29, 2011, Weisser and Muylle signed a license agreement on behalf of YN Canvas
and delivered the signed license agreement to WNC (Tr. Ex. 3). Weisser and Muylle then departed
for California. The executed license agreement that was delivered to WNC was substantially
similar to the Intellectual Property License Agreement (Tr. Ex. 411) that Weisser had drafted for
WNC to use with other WNC locations; however, the executed agreement had some revisions to
suit YN Canvas’s view of the business arrangement. WNC, however, found some of the terms of
the license agreement unacceptable and did not execute the agreement.
Upon their arrival in California, Weisser and Muylle opened a San Francisco WNC
location. YN Canvas’s first event, operating as Wine and Canvas of San Francisco, was held on
August 10, 2011. Weisser presumed that the signed license agreement that he had provided to
WNC was acceptable and permitted him to operate the WNC location in San Francisco. WNC
acted as though the parties had agreed to a business arrangement consistent with the full licensing
package developed by WNC and Weisser and that it simply needed to obtain executed documents.
Scott and Ms. McCracken traveled to San Francisco on behalf of WNC to provide
assistance to YN Canvas as it launched its first WNC event. Ms. McCracken instructed the painting
at the launch event and otherwise assisted. While Scott and Ms. McCracken were in California,
additional discussions ensued between WNC, Weisser, and Muylle regarding the need to execute
an acceptable agreement, consistent with the full licensing package for the business operations in

6

San Francisco. Unfortunately, the parties were unable to agree on terms, and no agreement
acceptable to all the parties was ever signed. After assisting YN Canvas with the first WNC event
in San Francisco on August 10, 2011, Ms. McCracken and Scott returned to Indianapolis.
The parties had some long-distance communications about executing an agreement
throughout the following months, but the relationship between them rapidly deteriorated. In
October 2011, WNC sent a written agreement for Weisser and Muylle to execute on behalf of YN
Canvas. This agreement called for payment of a $10,000 initial start-up fee, WNC’s 51%
ownership interest in the San Francisco operation, payment of a royalty fee, and inclusion of a
non-compete provision (Filing No. 499 at 207 line 12 to 208 line 11); (Filing No. 498 at 238, lines
13–17). YN Canvas did not agree to WNC’s proposed terms.
Between August 10 and November 18, 2011, WNC, as well as Scott and Ms. McCracken,
consented to the use of its trademark by YN Canvas, Muylle, and Weisser. During this time period
the WNC trademark did not make any profit but instead incurred a loss (Filing No. 502 at 41, lines
16–20).
On November 18, 2011, YN Canvas terminated the license agreement which it had
executed and delivered to WNC. Thereafter, YN Canvas discontinued using anything that had the
WNC logo or name, including aprons, shirts, an A-frame sign, and other marketing collateral.
(Filing No. 498 at 244, lines 12-19).
Also on November 18, 2011, YN Canvas, which had been operating as Wine and Canvas
of San Francisco, informed its customer base via an email that it no longer was operating as Wine
and Canvas of San Francisco and instead was changing its name to Art Uncorked (Tr. Ex. 473).
YN Canvas notified its customer base that if they were contacted by anyone representing
themselves as WNC, they would be dealing with a different company. The email also explained

7

that Art Uncorked would continue to provide painting and wine events in the San Francisco area,
and it would honor any vouchers that had been purchased through social media marketing such as
Living Social, Groupon, or PopSugar, for events of Wine and Canvas of San Francisco. A new
website, YELP account, and Facebook page were created for Art Uncorked. Through
approximately May 2012, the WNC mark would appear in Art Uncorked’s internet source code.1
However, after WNC sent a notice that Wine and Canvas was still mentioned in the source code,
Muylle and Weisser contacted their “web guy” and said, “…if there’s any reference at all, make
sure you remove it…” (Filing No. 500 at 86, lines 16-22).
A purportedly negative YELP review was posted by a customer identified as “Natalie G.”
(Filing No. 502 at 10, lines 12–18), to which Muylle responded on his Facebook page in a manner
which implied that WNC had hosted the party rather than Art Uncorked. Weisser, however, did
not participate in the YELP review communication.
After November 18, 2011, Weisser asserts that any use of the WNC name was unintentional,
and he did not deliberately attempt to cause confusion or mistake or to deceive consumers.
On November 28, 2011, WNC initiated this litigation in state court.
III. CONCLUSIONS OF LAW
A.

Default as to YN Canvas and Weisser Management
As an initial matter, the Court enters a judgment of default as to YN Canvas and Weisser

Management. As stated earlier, on November 22, 2013, a Clerk’s Entry of Default was entered for
these third party counterclaim defendants, but no Rule 55(b) order was entered. “A limited liability
company (which [YN Canvas and Weisser Management are]), like a corporation, cannot litigate

1

Source code and object code refer to the “before” and “after” versions of a computer program that is compiled (see
compiler) before it is ready to run in a computer. The source code consists of the programming statements that are
created by a programmer with a text editor or a visual programming tool and then saved in a file.
http://searchsoa.techtarget.com/definition/source-code.

8

in a federal court unless it is represented by a lawyer.” United States v. Hagerman, 549 F.3d 536,
537 (7th Cir. 2008). “The usual course when a litigant not entitled to litigate pro se loses its lawyer
in the midst of the case is to give it a reasonable opportunity to find a new one, and, if it fails,
either to dismiss the case or enter a default judgment.” Id. at 538 (internal citations omitted). YN
Canvas and Weisser Management have failed to hire counsel after years of litigation and after a
Clerk’s Entry of Default. Therefore, the Court enters Default Judgment against YN Canvas and
Weisser Management.
B.

WNC’s Claim for Damages
By its counsel’s statements during the damages hearing, WNC waived its claim for

damages under Counts 3, 4, and 5 of the Amended Complaint, and for damages under Count 7
based on any underlying criminal conduct of deception or criminal mischief. WNC is seeking
damages under Counts 1 and 2 (Trademark Infringement and False Designation of Origin), Count
6 (Abuse of Process), Count 7 (Civil Action under the Crime Victims Relief Act based on
intimidation and conversion), Count 8 (Breach of Contract), and Count 9 (Fraud). Additionally,
WNC waived damages on the basis of the Defaulted Defendants’ profits, which is one measure of
damages under the Lanham Act (Filing No. 502 at 41).
Regarding the claims for which WNC is seeking damages, only the well-pleaded
allegations relating to liability in the Amended Complaint are taken as true. After entry of default
judgment, “the well-pled allegations of the complaint relating to liability are taken as true, but
those relating to the amount of damages suffered ordinarily are not.” Wehrs v. Wells, 688 F.3d 886,
892 (7th Cir. 2012); see also 10A Charles Alan Wright, et al., Federal Practice and Procedure §
2688, at 58–59 (3d ed. 1998) (“If the court determines that defendant is in default, the factual
allegations of the complaint, except those relating to the amount of damages, will be taken as

9

true.”). Although liability is established through default, the defaulted party is liable only for those
damages that arise from the acts and injuries that are pleaded. Wehrs, 688 F.3d at 892 (citing 10
Moore’s Federal Practice, § 55.32[1][c] (3d ed. 2012)).
The outer bounds of the recovery allowable are of course measured by the principle
of proximate cause. The default judgment d[oes] not give [the plaintiff] a blank
check to recover from [the defaulted defendant] any losses it ha[s] ever suffered
from whatever source. It c[an] only recover those damages arising from the acts
and injuries pleaded and in this sense it [i]s [WNC’s] burden to show “proximate
cause.”
Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 70 (2d Cir. 1971), rev’d on other grounds, 409
U.S. 363 (1973). “At the damages hearing, the party seeking a default judgment must provide
evidence supporting the damages claimed.” Al-Kazemi v. General Acceptance & Inv. Corp., 633
F. Supp. 540, 542 (D.D.C. 1986) (citing Dundee Cement Co. v. Howard Pipe & Concrete
Products, Inc., 722 F.2d 1319, 1324 (7th Cir. 1983)). The entry of a default order does not,
however, preclude a party from challenging the sufficiency of the complaint. Alan Neuman Prods.,
Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988), cert. denied, 493 U.S. 858 (1989). Further,
in accounting for damages, the Court may not award relief different in kind or exceeding in amount
what the plaintiff demanded in the complaint. Fed. R. Civ. P. 54(c).
Upon motion of WNC, the evidence from the November 2014 trial was incorporated into
the record for the purpose of determining damages. Additional testimony was elicited from Ms.
McCracken and Weisser, and new exhibits were admitted. The Court now addresses WNC’s
claims in turn.
C.

Counts 1 and 2: Trademark Infringement and False Designation of Origin
Trademark infringement occurs when a person, without authorization,
(a) use[s] in commerce any reproduction, counterfeit, copy, or colorable imitation
of a registered mark in connection with the sale, offering for sale, distribution, or

10

advertising of any goods or services on or in connection with which such use is
likely to cause confusion, or to cause mistake, or to deceive; or
(b) reproduce[s], counterfeit[s], cop[ies], or colorably imitate[s] a registered mark
and appl[ies] such reproduction, counterfeit, copy, or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended to be used
in commerce upon or in connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which such use is likely
to cause confusion, or to cause mistake, or to deceive.
15 U.S.C. § 1114(1).
Regarding claims for false designation of origin, the Lanham Act provides that:
Any person who, on or in connection with any goods or services, or any container
for goods, uses in commerce any word, term, name, symbol, or device, or any
combination thereof, or any false designation of origin, false or misleading
description of fact, or false or misleading representation of fact, which—
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the
affiliation, connection, or association of such person with another person,
or as to the origin, sponsorship, or approval of his or her goods, services, or
commercial activities by another person, or
(B) . . .
shall be liable in a civil action by any person who believes that he or she is or is
likely to be damaged by such act.
15 U.S.C. § 1125(a).
Taking the allegations regarding liability as true, as this Court must do, WNC has pleaded
a sufficient factual basis to support claims for trademark infringement and false designation of
origin, and therefore, the Defaulted Defendants are liable for these violations of the Lanham Act.
Thus, the Court turns to damages.
The Lanham Act provides for the recovery of the defendant’s profits, any damages
sustained by the plaintiff, and the costs of the action for violations of the Lanham Act, including
trademark infringement and false designation of origin. 15 U.S.C. § 1117(a). As noted above,
WNC waived its right to recover the Defaulted Defendants’ profits, so the only claims before the
Court are actual damages sustained by WNC and costs of the action.

11

In assessing damages for trademark infringement and false designation of origin, the court
may enter judgment, according to the circumstances of the case, for any sum above the amount
found as actual damages, not exceeding three times such amount. Sands, Taylor & Wood v. Quaker
Oats Co., 34 F.3d 1340, 1347 (7th Cir. 1994). However, monetary recovery under section 35(a) of
the Lanham Act must be compensatory in nature and not punitive. Badger Meter, Inc. v. Grinnell
Corp., 13 F.3d 1145, 1157 (7th Cir. 1994) (“Under this section any recovery to the plaintiff must
constitute ‘compensation’ for its own losses or for the defendant’s unjust enrichment; section
1117(a) (unlike section 1117(b)) does not allow a ‘penalty’ against the defendant.”); Taco Cabana
Int’l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1127 (5th Cir. 1991).
Section 1117 confers a wide scope of discretion on the district court in fashioning a remedy
for a trademark infringement subject to the principles of equity. Maier Brewing Co. v. Fleischmann
Distilling Corp., 390 F.2d 117, 121 (9th Cir. 1968), cert. denied, 391 U.S. 966 (1968). “A
successful plaintiff in a trademark infringement case is not always entitled to a monetary award in
addition to injunctive relief, since any award for damages is subject to the principles of equity
which give the court discretion based upon a wide range of considerations.” Ramada Inns, Inc. v.
Apple, 482 F. Supp. 753, 757–58 (D.S.C. 1980); Otis Clapp & Son, Inc. v. Filmore Vitamin Co.,
754 F.2d 738 (7th Cir. 1985).
Upon careful review of the evidence from the November 2014 trial (which was
incorporated at the damages hearing upon WNC’s request), the additional testimony of Ms.
McCracken and Weisser, and the new exhibits from the damages hearing, the Court concludes that
WNC has not shown any actual damages sustained, arising from any trademark infringement or
false designation of origin. A plaintiff wishing to recover damages for a violation of the Lanham
Act must prove the defendant’s Lanham Act violation, that the violation caused actual confusion

12

among consumers of the plaintiff’s product, and, as a result, that the plaintiff suffered actual injury,
i.e., a loss of sales, profits, or present value (goodwill). Web Printing Controls Co. v. Oxy-Dry
Corp., 906 F.2d 1202, 1204–05 (7th Cir. 1990). Thus, recoverable damages are limited to the
amount of money required to compensate WNC for the actual confusion among consumers for
which WNC sustained injury. WNC tendered evidence of the sales and profits of the Defaulted
Defendants, which are discussed in Section D “Count 8: Breach/Equitable Relief” below, but it
failed to show any actual damages it suffered from the Lanham Act violations and has not shown
that it has been damaged by any actual consumer reliance based on confusion or reliance on
misleading statements of Weisser or the other Defaulted Defendants.
The third category of recovery under the Lanham Act is the costs of the action. The Lanham
Act explains that a prevailing “plaintiff shall be entitled . . . to recover . . . the costs of the action.”
15 U.S.C. § 1117(a) (emphasis added). Therefore, WNC is entitled to recover its costs of this
action from the Defaulted Defendants.
D.

Count 6: Bad Faith, Tortious Conduct, Abuse of Process, et al.
WNC’s Amended Complaint pleads Count 6 with three separate potential causes of action.

It is based solely on the Defendants’ alleged attempt to delay WNC’s trademark registration on
March 3, 2012, by requesting an extension of time to oppose the registration of “Wine and Canvas”
as a trademark. WNC’s factual allegations assert that the request for additional time was an abuse
of the legal system and its processes.
[A]n abuse of process action requires a finding of misuse or misapplication of
process for an end other than that which it was designed to accomplish. The purpose
for which the process is used is the only thing of importance. Thus, an abuse of
process claim has two elements: (1) an ulterior purpose, and (2) a willful act in the
use of process not proper in the regular conduct of the proceeding. The gravamen
of that tort is not the wrongfulness of the prosecution, but some extortionate
perversion of lawfully initiated process to illegitimate ends. There is no liability
where the defendant has done nothing more than carry out the process to its
13

authorized conclusion, even though with bad intentions. A regular and legitimate
use of process, though with an ulterior motive or bad intention is not malicious
abuse of process.
Brooks v. Harding, 2001 U.S. Dist. LEXIS 6777, at *21–22 (S.D. Ind. Jan. 12, 2001) (internal
citations and quotation marks omitted).
The allegations in the Amended Complaint do not support this claim. Most of the
allegations relating to this claim are conclusory statements, and WNC’s last allegation is that it has
been “damaged in an amount to be determined as a result of the Defendants’ filing of the Extension
Request.” (Filing No. 36 at 15, ¶92.) WNC was provided an opportunity to prove up its damages
resulting from “Defendants’ filing of the Extension Request” during the damages hearing, and it
failed to do so. WNC did not provide any evidence that it has suffered damages as a result of the
Defaulted Defendants’ request for additional time to oppose the trademark registration. Therefore,
WNC is not entitled to damages on this count.
E.

Count 7: Civil Action Under the Indiana Crime Victims Act (Intimidation and
Conversion)
To be entitled to relief under Indiana Code § 34-24-3-1, a person must have “suffer[ed] a

pecuniary loss as a result of a violation of IC 35-43, IC 35-42-3-3, IC 35-42-3-4, or IC 35-45-9.”
WNC is seeking civil relief for the criminal acts of intimidation and conversion. Intimidation,
codified at Indiana Code § 35-45-2-1, is not a criminal offense enumerated in the Indiana Crime
Victims Relief Act for which relief can be awarded in a civil action. Therefore, as a matter of law,
WNC cannot be awarded damages against the Defaulted Defendants for any alleged intimidation.
Under Indiana Code § 35-43-4-3, conversion is committed when a person “knowingly or
intentionally exerts unauthorized control over property of another person.” For this claim, WNC
pleaded conclusory allegations that the Defaulted Defendants “have violated I.C. 35-43 in the
following particulars: . . . For ‘Conversion’ as expressed in I.C. 35-43-4-3,” and “[a]s a result of
14

these violations, Plaintiff has suffered actual damages in excess of the minimum jurisdictional
requirements of this Court.” (Filing No. 36 at 15, ¶¶95–96.) WNC also incorporated the previous
paragraphs of the Amended Complaint. But WNC did not plead any specific conduct by the
Defaulted Defendants relating to its allegation of criminal conversion. The Court is left to infer
that any intentional exertion of unauthorized control over property is related to WNC’s trademark,
customer lists, and concept. A trademark can be considered property under Indiana law. See AnHung Yao v. State, 975 N.E.2d 1273, 1281 (Ind. 2012). However, in order to be entitled to relief
under the Indiana Crime Victims Relief Act, a plaintiff must show that it suffered a pecuniary loss
as a result of the criminal conduct, not just that criminal conduct occurred. See, e.g., Naugle v.
Kyler Bros. Servs., 2006 U.S. Dist. LEXIS 22921, at *15 (S.D. Ind. Mar. 31, 2006) (failure to plead
“determinant sum” led to dismissal of conversion claim and Indiana Crime Victims Relief Act
claim); Scott v. Durham, 2011 U.S. Dist. LEXIS 578, at *24–25 (N.D. Ind. Jan. 3, 2011) (failure
to allege pecuniary loss led to adverse summary judgment). WNC simply does not plead facts to
support a claim that a pecuniary loss resulted from any criminal conversion. WNC makes no
connection between conversion and a pecuniary loss. Additionally, there is no evidence of a
pecuniary loss from any conversion that would allow for an award of damages under the Indiana
Crime Victims Relief Act.
F.

Count 8: Breach/Equitable Relief
Because the Court must accept as true all allegations relating to liability, the Court must

accept that the parties orally agreed to a business arrangement as evidenced in the full licensing
package attached as Exhibit A to the Amended Complaint (Filing No. 36-1). See Bogie v.
Rosenberg, 705 F.3d 603, 609 (7th Cir. 2013) (courts consider the facts in the complaint as well

15

as the exhibits attached to the complaint, and where the exhibits contradict the allegations in the
complaint, the exhibits generally will control).
A review of the full licensing package reveals that each of the agreements was between
WNC and YN Canvas, not Weisser or Muylle individually, with the exception of the “Intellectual
Property License Agreement,” which was to be between WNC and WC SF BAY LLC. The
allegations in the Amended Complaint assert that the parties “would form” WC SF BAY LLC,
which “would license” WNC’s trademarks and “would operate” a WNC location in San Francisco
(Filing No. 36 at 5, ¶28). WC SF BAY LLC “was to be owned by two (2) members:” WNC and
YN Canvas. (Id.) However, the remaining allegations do not support a conclusion that WC SF
BAY LLC actually was ever formed, and the evidence suggests that it never was formed.
Therefore, the Court will consider the parties to the “Intellectual Property License Agreement” to
be WNC and YN Canvas, which is consistent with the other agreements in the full licensing
package, consistent with the proposed operating agreement of WC SF BAY LLC wherein YN
Canvas would receive 100% of the net profits, and consistent with the signature lines in the
“Intellectual Property License Agreement,” requiring signatures in corporate, not individual,
capacities. This also is consistent with the evidence presented at trial and during the damages
hearing: YN Canvas actually was formed and actually did operate the business in San Francisco.
The “Intellectual Property License Agreement” required the payment of royalties at a rate
of 10% on the licensee’s gross sales (Filing No. 36-1 at 40). It did not require payment of a startup license fee. YN Canvas operated the WNC San Francisco location from August 2011 through
November 18, 2011. YN Canvas then stopped operating as WNC of San Francisco on November
18, 2011, and it terminated the parties’ agreement pursuant to Section 11.2 of the “Intellectual
Property License Agreement” (Filing No. 36-1 at 32–33). WNC alleges that the Defendants

16

breached the parties’ agreement by, among other things, failing to pay the royalty fee. The Court
must accept this allegation regarding liability. Therefore, the Court concludes that YN Canvas, the
Defaulted Defendant who was a party to the agreement, is liable for breaching the parties’
agreement by failing to pay royalties, and the Court will now turn to damages on this claim.
Damages are assessed for the time period when YN Canvas had a contractual obligation to
pay royalties to WNC—August 2011 to November 18, 2011—at a rate of 10%, which is called for
in the “Intellectual Property License Agreement.”
WNC and Weisser each tendered evidence during the damages hearing concerning the
deposits made into the bank accounts of the Defaulted Defendants from the operation of the WNC
San Francisco location. Weisser also submitted evidence of the expenses for the WNC San
Francisco location, thereby showing profits and losses. The Court does not take the evidence of
expenses into account because the agreement called for royalties on gross sales, not profits.
WNC submitted evidence showing the following deposits: $32,422.71 (August 2011),
$10,168.72 (September 2011), $7,517.47 (October 2011), and $3,275.02 (November 1–18, 2011).
Weisser submitted evidence showing the following deposits: $29,922.71 (August 2011),
$10,068.72 (September 2011), $6,215.50 (October 2011), and $5,265.90 (all of November 2011).
Weisser provided sufficient testimony to explain the $2,500.00 difference between the parties’
evidence for the August 2011 deposits. Muylle had paid a $2,500.00 capital contribution to YN
Canvas in August, so that amount would not have been from sales or revenue. The Court therefore
will assess damages for August 2011 using Weisser’s evidence of $29,922.71. Regarding the
difference between the evidence for September and October, Weisser could only speculate
regarding the basis for the difference. Thus, the Court will use WNC’s evidence of $10,168.72 and
$7,517.47. Regarding the month of November, Weisser provided the deposit amount for the entire

17

month of November whereas WNC estimated the November deposit through November 18, 2011,
which is the date the agreement was terminated. Therefore, the Court will use WNC’s evidence of
$3,275.02.
WNC urges the Court to add a 40% premium to the bank deposits to account for any
difference between gross and net sales, resulting from the sale of discounted vouchers through
Groupon, Living Social, and PopSugar. WNC’s suggestion of a 40% premium is conjecture based
upon varying, possible agreements with these online vendors. Additionally, it is reasonable to
presume that not every customer would have paid for the WNC events through Groupon, Living
Social, or PopSugar. Certainly some of the sales would have been to full paying customers. WNC
did not provide any evidence of what portion of the deposits or gross sales came from full paying
customers or from these online vendors. The Court declines to engage in such guesswork to add
an additional percentage to the evidence of the deposits submitted in evidence.
WNC also has made a demand for the payment of a $10,000.00 start-up license fee.
However, when a party attaches a written instrument to its complaint and incorporates the written
instrument into the pleadings, if there are contradictions between the written instrument and the
complaint, the written instrument generally will trump. Bogie, 705 F.3d at 609. WNC attached and
incorporated the “Intellectual Property License Agreement” as part of the full licensing package.
That agreement did not require payment of a start-up license fee. Rather, it called for the payment
of a 10% royalty on gross sales. To the extent WNC is seeking a start-up license fee in addition to
payment of royalties, that request is denied.
WNC additionally asserts that it was damaged by the Defaulted Defendants’ continued
operation of an art studio venture after the agreement was terminated in November 2011. WNC
bases this allegation on a non-competition provision found in the full licensing package.

18

Indiana courts have generally recognized and respected the freedom to contract. However,
covenants to not compete are in restraint of trade and are not favored by the law. Non-competition
agreements are strictly construed against the employer and are enforced only if reasonable.
Covenants must be reasonable with respect to the legitimate interests of the employer, restrictions
on the employee, and the public interest. Nightingale Home Healthcare, Inc. v. Helmuth, 15 N.E.3d
1080, 1083 (Ind. Ct. App. 2014). The Court must “determine whether the scope of the agreement
is reasonable in terms of time, geography, and types of activity prohibited.” Pathfinder Communs.
Corp. v. Macy, 795 N.E.2d 1103, 1109 (Ind. Ct. App. 2003).
Here, the purported non-competition provision is drafted to prohibit YN Canvas, Weisser,
and Muylle from engaging in “any business in competition with [WNC]” for a period not to exceed
one year from the date of the agreement. It does not provide any limitation to its geographic scope
and does not provide a signature line for Weisser or Muylle in their personal capacity (Filing No.
36-1 at 44). Because the agreement does not provide a reasonable limit to its geographic scope and
does not make Weisser or Muylle signatories in their personal capacity, and because noncompetition agreements are strictly construed against the “employer” and are enforced only if
reasonable, the Court declines to enforce the unsigned, “oral” non-competition provision against
the Defaulted Defendants. Therefore, the Court will not award any damages based on a noncompetition provision.
For its breach of the agreement, YN Canvas is liable for an amount of damages totaling
$5,088.39. This amount is calculated by applying the 10% royalty to the evidence of deposits for
the WNC San Francisco operations: $29,922.71 for August 2011; $10,168.72 for September 2011;
$7,517.47 for October 2011; and $3,275.02 for November 1–18, 2011.

19

G.

Count 9: Fraud
WNC’s Amended Complaint fails to plead the claim of fraud, Count 9, with sufficient

particularity as required by Federal Rule of Civil Procedure 9(b). Rule 9(b) requires that “[i]n
alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud
or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged
generally.” Instead of pleading the circumstances of fraud with particularity, WNC’s Amended
Complaint simply incorporates the preceding paragraphs and then alleges that “Defendants have
committed fraud in fact and fraud in the inducement.” (Filing No. 36 at 16, ¶102.) WNC provides
none of the “who, what, where, when, and how” of the alleged fraud. Therefore, WNC is not
entitled to damages on its claim of fraud.
H.

In re Uranium Antitrust Litigation
Weisser relies on the case In re Uranium Antitrust Litigation, 617 F.2d 1248, 1262 (7th

Cir. 1980), to argue that any damage award against him is impermissible because it would be
inconsistent with the jury’s verdict against WNC and in favor of Muylle following the November
2014 trial. Weisser explains that WNC’s allegations against him assert joint liability with
Defendant Muylle, and therefore, the jury verdict in favor of Muylle and a subsequent damage
award against Weisser would be inconsistent.
The evidence shows that the extent and level of involvement in business negotiations and
the subsequent business operations varied among the four defendants. The identity of the actual
contracting parties and the extent of the defendants’ knowledge are, among other considerations,
facts that could have led the fact finder to different conclusions regarding the various defendants.
The evidence shows that many of the allegations in the Amended Complaint of conduct committed
by all defendants was actually committed singly and separately by various defendants. Therefore,

20

the Uranium case is not applicable here. The Court also notes that damages are not awarded against
Weisser, only the costs of this action because of his status as a Defaulted Defendant.
I.

Injunctive Relief
In its prayer for relief, WNC seeks injunctive relief pursuant to 15 U.S.C. § 1116 that
Defendants and their owners, partners, officers, directors, agents, servants,
employees, representatives, licensees, subsidiaries, manufacturers and distributors,
jointly and severally, are enjoined throughout the world during the pendency of this
action, and permanently thereafter from:
(i)

Infringing the WC Marks in any manner;

(ii)

Manufacturing, marketing, advertising, distributing, selling,
promoting, licensing, exhibiting, or displaying any product or
service using WC Marks or any copies or counterfeits thereof or
anything confusingly similar thereto;

(iii)

Otherwise infringing the WC Marks;

(iv)

Using any false description, representation, or designation, or
otherwise engaging in conduct that is likely to create an
erroneous impression that Defendants’ products are endorsed by
Plaintiff or any related company, sponsored by Plaintiff or any
related company, or are connected in anyway with Plaintiff
and/or Plaintiff or any related company;

(v)

Interfering in the existing contracts or business expectancies of
Plaintiff in any manner whatsoever;

(vi)

Using the WC Marks in any manner whatsoever;

(vii)

Holding themselves as licensees or otherwise authorized users of
the WC Marks;

(viii)

Using the WC Marks in promotional literature or materials,
including those posted on the Internet.

(Filing No. 36 at 17–18.) Because WNC has pleaded a sufficient factual basis to support claims
for trademark infringement and false designation of origin the prayer for injunctive relief is
granted.

21

IV. CONCLUSION
Based on the foregoing findings of fact and conclusions of law, Default Judgment is entered
against Defendant YN Canvas CA, LLC in the amount of $5,088.39 on WNC’s breach of contract
claim. WNC is entitled to recover its costs of this action from Defaulted Defendants Theodore
Weisser, YN Canvas CA, LLC, and Weisser Management Group, LLC. Pursuant to Local Rule
54-1, WNC must submit its bill of costs within fourteen (14) days of the date of this Order.
Counsel is encouraged to review Seventh Circuit case law and the federal statutes governing costs.
WNC is also granted injunctive relief, and the Defaulted Defendants are enjoined as set forth in
this Entry. Final judgment shall be entered accordingly.
SO ORDERED.
Date: 5/1/2015

DISTRIBUTION:
P. Adam Davis
DAVIS & SARBINOFF LLP
[e-mail]
Carol Nemeth Joven
PRICE WAICUKAUSKI & RILEY
[e-mail]
Ronald J. Waicukauski
PRICE WAICUKAUSKI & RILEY
[e-mail]

22