Midas International Corporation v Poulah Investors, LLC et al
Filing
56
MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 8/29/2016. (C/M 8/29/2016 aos, Deputy Clerk)
FILED
us. DIS mleT COURT
015H:1CT DF tiARYLAHO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division
ZGlb AUG 2q
*
MIDAS INTERNATIONAL
CI F.:
Finally, although '''Maryland follows the common law 'American Rule,' which states
that, generally, a prevailing party is not awarded attorney's fees' ... [c]ourts make exceptions
where 'the parties to a contract have an agreement that authorizes recovery of attorney fees ... ,7
Hearn Insulalion & Improvement Co. v. Bonilla, No. 09-CV-00990-A W, 2011 WL 220091, at
* I (D.
Md. Jan. 21, 2011), afF d, 456 F. App'x 311 (4th Cir. 20 II ) (quoting Nova Research. Inc.
v. Penske Truck Leasing Co., L.P., 952 A.2d 275, 281 (Md. 2008)). Here, the Franchise
Agreement provided that, in the event Midas was required to obtain counselor other legal
expenses to enforce any obligations under the Agreement, Midas would be entitled to recover
attorneys' fees and costs from Poulah. Id. at 41. In accordance with Local Rule 109 (D. Md.),
Midas shall file a motion for attorneys' fees and costs within fourteen (14) days of the entry of
judgment. Additionally, the Court will award post-judgment interest at the statutory rate.s See 28
U.S.c.
S
1961.
Additionally, treble damages are not an automatic remedy under ~ II 17; courts have "a great deal of discretion ...
in fashioning a remedy under this provision." Motor City Bagels. L.L.c. v. Am. Bagel Co., 50 F. Supp. 2d 460, 487
(D. Md. 1999) (quoting Larsen v. Terk Techs. Carp., 151 F.3d 140, 149-50 (4th Cir. 1998)).
6
7 Although the Lanham Act also provides for the recovery ofanorneys'
fees, such awards are to be given only in
"exceptional cases." 15 U.S.C. ~ II 17(a). "A case is exceptional when the conduct of the losing party is malicious,
fraudulent, deliberate, and willful." Potomac Coiference Corp. olSeventh-Day Adventists v. Takoma Acad. Alumni
Ass'n. Inc., No. CIY.A. DKC 13-1128,2014 WL 857947, at *23 (D. Md. Mar. 4, 2014) (citation and internal
quotation marks omitted).
8 Although Midas has requested post-judgment interest at the contractual rate of6.25 percent, "[alfler entry of
judgment. interest will accrue at the federal post-judgment interest rate." Roger E. Herst Revocable Tr. v. Blinds (0
Go (U.s.) Inc., No. CIY.A. ELH-IO-3226, 201 I WL 6409129, at *26 (D. Md. Dec. 20, 2011). Although "[plarties
may contract to, and agree upon, a post-judgment interest [rate Iother than that specified in ~ 196 I," to do so. "they
must specifically contract [through clear, unambiguous and unequivocal language] around the general rule that a
cause of action reduced to judgment merges into the judgment and the contractual interest rate therefore disappears
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III.
MOTION FOR SUMMARY ,JUDGMENT AGAINST THE INDIVIDUAL
DEFENDANTS
A. Standard of Review
Summary judgment is appropriate if "materials in the record, including depositions,
documents, electronically stored information, affidavits or declarations. stipulations ... ,
admissions, interrogatory answers, or other materials," Fed. R. Civ. P. 56(c), show that there is
"no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law," Fed. R. Civ. P. 56(a); see also Celolex Corp. v. Calrel/, 477 U.S. 317, 322 (1986). The
party moving for summary judgment bears the burden of demonstrating that no genuine dispute
exists as to material facts. Pulliam Inv. Co. v. Cameo Props., 810 F.2d 1282, 1286 (4th Cir.
1987). If the moving party demonstrates that there is no evidence to support the non-moving
party's case, the burden shifts to the non-moving party to identify specific facts showing that
there is a genuine issue for trial. See Celolex, 477 U.S. at 322-23. Summary judgment is proper
if there are no issues of material fact and the moving party is entitled to judgment as a matter of
law.ld. at 322; Francis v. Booz. Allen & Hamillon. Inc., 452 F.3d 299, 302 (4th Cir.2006). A
material fact is one that "might affect the outcome of the suit under the governing law." Spriggs
v. Diamond Aula Glass, 242 F.3d 179, 183 (4th Cir. 200 I) (quoting Anderson v. Libel'/y Lobby.
Inc., 477 U.S. 242, 248 (1986». A dispute of material fact is only "genuine" ifsuflicient
evidence favoring the non-moving party exists for the trier of fact to return a verdict for that
party. Anderson, 477 U.S. at 248. However, the nonmoving party "cannot create a genuine issue
of material fact through mere speculation or the building of one inference upon another." Beale
v. Hardy, 769 F.2d 213, 214 (4th Cir. 1986). The Court may only rely on facts supported in the
record, not simply assertions in the pleadings, in order to fulfill its "affirmative obligation ... to
for post-judgment purposes." In re Riebesell, 586 F.3d 782, 794 (10th Cir. 2009) (citations and internal quotation
marks omitted).
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prevent 'factually unsupported claims or defenses' from proceeding to trial." FelTy v. GraveHumphreys Co., 818 F.2d 1126, 1128 (4th Cir. 1987) (quoting CeloTex, 477 U.S. at 324-25).
When ruling on a motion for summary judgment, "[t]he evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255.
B. Discussion
I. Breach of Guaranty
Midas seeks summary judgment on its claim that the Individual Defendants breached the
Guaranty by failing to pay the sums owed under the Franchise Agreement, including the
$13,587.10 delinquency, as well as liquidated damages owed under the Agreement. ECF No. 35
at 10- J I. "A guaranty agreement is a contract under which the guarantor promises to perform the
obligations of the principal if the principal fails to perfonn." CapiTalSource Fin.. LLC v. Delco
Oil, Inc.. 608 F. Supp. 2d 655, 662 (D. Md. 2009) (citing Gen. MoTors AccepTance Corp. v.
Daniels, 492 A.2d J 306 (Md. J 985)). A guaranty agreement is interpreted using ordinary
principles of contract interpretation, and thus, "when the language of the [guaranty] is plain and
unambiguous there is no room for construction, and a court must presume that the parties meant
what they expressed." Gen. MoTors AccepTance Corp., 492 A.2d at J 31O.
Here, the Guaranty provided: "[The Individual Defendants], for value received,
unconditionally guarantees to Midas the prompt payment in full when due or declared due ... all
indebtedness, liability or liabilities ... now or hereafter owing or to become owing by [Poulah]
to Midas" and that they further "guarantee(] to Midas the prompt, full, and faithful performance
and discharge by [Poulah] of each and everyone of the terms, conditions, [and] agreements ...
on the part of [Poulah] ... to Midas ... ." ECF No. 35-1 at 49. By entering such agreement,
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therefore, the Individual Defendants agreed to become liablc to the same extent Poulah would be
liable for any delinquency or damages that would arise under the Franchise Agreement. See id.
In opposing Midas' Motion, Kadjemse and Djeutcha do not dispute that they agreed in
the Guaranty to be personally liable for Poulah's performance of and liability under the
Franchise Agreement.9 See ECF Nos. 51 & 52. Rather, they argue that Poulah did not breach the
Agreement because "Midas breached the Franchise Agreement pertaining to repaying Poulah for
expenses incurred in providing and paying for warranty services." See, e.g., ECF No. 51-1 at 9.
Specifically, according to Kadjemse and Djeutcha, Midas was obligated to reimburse Poulah for
any payments made to customers to satisfy warranty claims and Midas breached this obligation
by refusing to make such reimbursements. See id. at 2. Kadjemse and Djeutcha contend that the
stated past due amount, $13,587.10. "is clearly more than offset by the unreimbursed expenses of
Poulah." Id. at 9.
Kadjemse's and Djeutcha's responses are insufficient to create a genuine issue of
material fact in multiple respects. First, and most importantly, Kadjemse and Djeutcha have
failed to submit any evidence to support their claim of such offsets. See, e.g., Smith v.
Richardson, No. CIV.A. PWG-14-1042, 2015 WL 620579, at *1 (D. Md. Feb. 11,2015) (citing
Celotex, 477 U.S. 317) (emphasis added) ("If the party seeking summary judgment demonstrates
that there is no evidence to support the nonmoving party's case, the burden shifts to the
nonmoving party to identify evidence that shows that a genuine dispute exists as to material
facts."). Moreover, thc setoffs that Kadjemse and Djeutcha contend were owed to Poulah were
Because Tegangtchouang has failed to respond to Midas' Motion for Summary Judgment, the facts established by
Midas' Motion are deemed to be "uncontroverted," but Midas "must still show that the uncontroverted facts entitle
[it] to ajudgment as a mailer of law." Cusler v. Pan Am. Life Ins. Co.• 12 F.3d 410.416 (4th Cir. 1993) (citation and
internal quotation marks omitted).
9
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only allowed under the Franchise Agreement upon written agreement by Midas. The Franchise
Agreement provides:
[Poulah] agrees not to set off against any amounts due to Midas any claims for
credit pursuant to warranties or Guarantees honored by Franchisee, except to the
extent that such credits have been granted by the issuance of a written credit
memorandum to [Poulah] prior to the dates such amounts are due to Midas.
ECF No. 35-1 at 31. Kadjemse and Djeutcha have not argued, nor have they presented any
evidence, that Midas issued any such written credit memorandum allowing such seton's.
Midas has presented sufficient evidence demonstrating that Poulah became deficient in
its obligations to Midas under the Franchise Agreement before the Agreement expired, and by
failing to dc-identify the Shop as a Midas shop after the Agreement expired. See ECF No. 35-1 at
5-8. The Individual Defendants are therefore also liable for breach of the Guaranty to the same
extent that Poulah is liable under the Franchise Agreement. Midas is accordingly entitled to
summary judgment in its favor on this claim.
2. Trademark Infringement
Midas also alleges that the Individual Defendants, like Poulah, are liable for trademark
infringement for continuing to use the Midas marks after terrnination of the Franchise
Agreement.10 ECF No. 1 ~~ 28-37. "[I]n general, an individual corporate officer or director is
not subject to personal liability simply by virtue of his office; such liability attaches only if the
corporate veil can be pierced which appropriately occurs only in certain extraordinary
circumstances." Stafford Urgent Care, Inc. v. Garrisonville Urgent Care, p.e., 224 F. Supp. 2d
1062,1065 (E.D. Va. 2002). But it is well-settled that "[i]ndividual defendants, such as
[Tegangtchouang, Djeutcha, and Kadjemse], can be liable for trademark infringement 'inasmuch
10 Midas has not moved for summary judgment on its second claim for relief against the Individual Defendants,
namely, common law unfair competition. See ECF No. I ~, 38-41; ECF No. 35. Presumably Midas intended to
abandon this claim for the same reasons indicated in its Motion for Default Judgment against Poulah. ECF No. 34 at
10 n. I.
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as they have personally participated in the unlawful acts.''' Cava Grp., 2016 WL 3632689, at *5
n.ll (quoting World Gym Licensing, Ltd v. Fitness World, Inc., 47 F. Supp. 2d 614, 624 (D. Md.
1999)); see also Polo Fashions, Inc. v. Crajiex, Inc., 816 F.2d 145, 149 (4th CiT. 1987) ("A
corporate official may be held personally liable for tortious conduct committed by him, though
committed primarily for the benefit of the corporation. This is true in trademark infringement
and unfair trade practices cases."). If, however, the individual defendant "'does not personally
participate in the corporation's
[trademark infringement], general corporation law does not
subject him to liability simply by virtue of his office.''' Bright Imperial Ltd. v. RT
MediaSolUlions, S.R.o., No. 1:II-CV-935-LO-TRJ,
2012 WL 1831536, at *9 (E.D. Va. May 18,
2012) (quoting Tillman v. Wheaton-Haven Recreation Ass 'n, Inc., 517 F.2d 1141, 1144 (4th
Cir.1975».
In its Motion for Summary Judgment, Midas argues that it is entitled to summary
judgment in its favor on this claim because "the Individual Defendants, independently and as
Guarantors of Poulah, were using the marks in connection with repairing automobiles" at the
Shop. ECF No. 35 at 12. But Midas has neither alleged nor provided evidence demonstrating
how any of the Individual Defendants personally participated in the continued use of Midas'
trademarks after expiration of the Franchise Agreement. The only evidence in this regard is that
Midas repeatedly urged Kadjemse, the manager of Poulah, to cease using the marks.
II
ECF No.
35-1 ~ 26. This notice, however, is insufficient to establish that Kadjemse, or any of the other
Individual Defendants, "personally participated in the unlawful acts." Cava Grp., 2016 WL
3632689, at *5 n.11 (citation and internal quotation marks omitted).
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Midas also submitted evidence that Poulah employees continued to use business cards displaying Midas
trademarks after tennination of the Franchise Agreement, but the individual whose name appears on the business
card is not a defendant in this case. ECF No. 35-1 at 6, 61.
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Midas also argues, however, that the Individual Defendants should be held liable for
trademark infringement "as Guarantor's ofPoulah's
obligations under the Franchise
Agreement." ECF No. 35 at 13. Although the Guaranty does not impute all tort-based or
statutory liability for which Poulah may have eventually been found liable onto the Individual
Defendants, its language does require that the Individual Defendants guaranty the payment of all
"Iiability or liabilities ... of any and every kind or nature" for which Poulah may become
responsible. ECF No. 35-1 at 49. Thus, to the extent Poulah is liable for trademark infringement
damages, the Personal Guaranty requires that the Individual Defendants pay such liabilities in the
event Poulah fails to do so. But this responsibility to pay for damages does not establish the
Individual Defendants' personal liability for trademark infringement. Thus, because Midas has
not submitted evidence from which the Court could find that the Individual Defendants are
personally liable for violation of the Lanham Act, Midas' Motion for Summary Judgment must
be denied in this regard.
3. Damages
Midas' request for damages against the Individual Defendants is identical to its request
with respect to Poulah. For the same reasons discussed above with respect to Midas' Motion for
Default Judgment, Midas is entitled to recover from the Individual Defendants 13,587.10 in
amounts Poulah owed under the Franchise Agreement, as well as accrued interest totaling
$843.46, contractual liquidated damages totaling $23,500, attorneys' fees and costs, and postjudgment interest at the statutory rate. See ECF No. 35-1 at 4, 6-8. Even assuming, however, that
the Individual Defendants were personally liable for trademark infringement, treble damages
could not be awarded because Midas has failed to submit any evidence respecting the amount of
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damages to which it would be entitled under the Lanham Act. See, supra, Part III.B.3. Thus,
Midas' claim for damages is granted, in part, and denied, in part.
IV.
CONCLUSION
For the foregoing reasons, Midas' Motions, ECF Nos. 34 & 35, are granted, in part, and
denied, in part. Specifically, Midas' Motion for Default Judgment is granted with respect to
liability, and granted, in part, and denied, in part, with respect to damages. Midas' Motion for
Summary Judgment against the Individual Defendants is granted with respect to liability and
damages for breach of the Guaranty, but is denied with respect to liability and damages on
Midas' claim of trademark infringement. Judgment will be entered in favor of Midas and against
Poulah and the Individual Defendants, jointly and severally, in the amount of$37,930.56,
exclusive of attorneys' fees and costs. A separate Order follows.
Dated: August
"2. ')
, 2016
GEORGEJ.HAZEL
United States District Judge
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