Opinion
B231071
02-15-2012
BEVERLY HILLS ESCROW, Plaintiff and Respondent, v. MAURICE NAZARIAN, Defendant and Appellant.
Law Offices of Baruch C. Cohen and Baruch C. Cohen, for Defendant and Appellant. Stanley Borthman for Defendant and Appellant.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Los Angeles County Super. Ct. No. SC104227
APPEAL from a judgment of the Superior Court of Los Angeles County. Jacqueline Connor, Judge. Affirmed.
Law Offices of Baruch C. Cohen and Baruch C. Cohen, for Defendant and Appellant.
Stanley Borthman for Defendant and Appellant.
Maurice Nazarian registered the business name of Beverly Hills Escrow as a domain name. When the company discovered this, it asked Nazarian to give up his interest in the name; when the parties failed to agree, Beverly Hills Escrow sued, claiming a violation of California's unfair competition law, and obtained a permanent injunction. Nazarian appeals. Finding no basis for reversal, we affirm.
FACTUAL AND PROCEDURAL HISTORY
Respondent Beverly Hills Escrow ("BHE") is a corporation that has been engaged in the escrow business since the 1950's, and has been owned by Lola Levoy since 1973. In 2004, appellant Maurice Nazarian registered "BeverlyHillsEscrow.com" as a domain name. In approximately 2009, BHE discovered this registration, and unsuccessfully sought to obtain the domain name from Nazarian. BHE filed a complaint alleging a single cause of action for unfair competition (Bus. & Prof. Code, § 17200), seeking injunctive relief and restitution in July 2009. The parties tried the case to the court on December 21, 2010, and the court entered judgment for BHE, permanently enjoining Nazarian from using the name of the company or the domain name; the court awarded no monetary relief. Nazarian timely appealed.
All further statutory references, unless otherwise indicated, are to the Business and Professions Code.
Evidence at Trial
At trial, Nazarian, who was unemployed, testified that he registered the domain name "BeverlyHillsEscrow.com" in October 2004. At the time he registered that name, he had never owned an escrow company, or been personally involved in an escrow transaction, nor did he live or work in Beverly Hills. He testified at trial that at the time he registered the name, he did a Google search which turned up no such name, but did not check a telephone directory or any other noninternet source to see whether the name was in use at that time. In January 2005, he saw an advertisement for BHE and spoke to the office manager and offered to sell the name to them for $10, but was refused.
In late 2008 or early 2009, Nazarian was contracted by Manouch Delshad, the new CEO of BHE, who asked to purchase the domain name. Nazarian refused, and explained the concept of "cybersquatting" to Delshad. In April 2009, according to Nazarian, Delshad's assistant called him to say, incorrectly, that a court had ordered the transfer of the codes. Delshad called several weeks later and threatened Nazarian.
Counsel for BHE then sent a letter asking him to withdraw the name, or risk litigation for injunctive relief and damages. Nazarian did not withdraw the registration or agree to stipulate to a judgment against using it, but did offer to give it up without payment. Up to that time, Nazarian had made no use of the domain name, nor had he done so by the time of trial. The domain name had become dormant.
On behalf of BHE, Delshad testified that he became CEO of BHE in 2007, and sought to have a website designed and to register the business name for marketing purposes. It was through that process that he discovered, in 2009, that Nazarian had already registered the name. He contacted Nazarian, who told him that he owned the name, along with many others, but would sell it for $5,000. In a second conversation, Delshad informed Nazarian that BHE had obtained an injunction against another individual who sought to use their name. In a third conversation, Nazarian called Delshad and was adamant that he owned the name and could sell it to anyone because he was in the business of cybersquatting. At some point, Nazarian said he would not sell the name to BHE.
Delshad testified that Nazarian's use of the domain name had already interfered with BHE's operations. First, it was unable to register its name as its domain name. In addition, customers had indicated difficulty in locating BHE because, if they entered the name on line, there was no active site.
Lola Levoy, the owner of BHE, was the final witness. She testified that the business had been a corporation, since 1950, and that she had purchased it 37 years before the trial. Her marketing consisted of participation in groups and conferences in southern California, rather than advertising. She viewed her name as synonymous with the company, and used the company name when she participated in these functions. She expressed concern about the potential harm to the company and her reputation and livelihood based on Nazarian's use of the name in light of the fact that users of her services identify the name Beverly Hills Escrow with her company.
The Court's Ruling
The court found that Nazarian had violated section 17200, that the domain name he registered was "confusingly similar" to BHE, and that Nazarian had acted in bad faith in acquiring the name and demanding payment. The court further found that "the public is highly likely to be deceived by defendant's confusingly similar domain name and further finds that based on the testimony of Lola Levoy, plaintiff has established a secondary meaning to the name Beverly Hills Escrow, a corporation conducting business in Beverly Hills and surrounding areas for over 60 years." The court found Nazarian's statements not believable and not supported by the evidence at trial, but found BHE's evidence more persuasive and credible.
DISCUSSION
Nazarian asserts that the court erred in denying his motions in limine and that BHE failed to establish cybersquatting pursuant to title 15 of the United States Code section 1125(d)1(A)(i). The claim asserted by BHE was not brought under federal law, but under state law; BHE was not required to prove the elements of cybersquatting as defined by the federal statute. Accordingly, we will treat the appeal as an assertion that there was not substantial evidence to support the findings of the trial court. Finding that there was substantial evidence to support the findings of the trial court on the claim that was actually tried, we affirm.
Appellant failed to address the requirements of proof of the claim at issue, and cited neither the statute nor the relevant cases in his brief; he also failed to address the standard of review. In addition, the recitation of the facts was detailed as to Nazarian's testimony, and constrained as to the other witnesses, the testimony which in fact the court found reliable. Despite this deficiency in attention to the rules governing appeals (Cal. Rules of Court, rule 8.204(a)(1)), we will address the merits of this matter.
1. The In Limine Motions
Nazarian filed three in limine motions for this court trial, the first of which sought to exclude expert witnesses because BHE had failed to timely designate such witnesses. BHE indicated, prior to the filing of the motion, that it intended to call no experts. Motion two sought to exclude evidence and witnesses not produced in discovery; at the hearing Nazarian indicated the witness to be excluded was Lavoy. Motion three sought to exclude lay opinion testimony, on the ground that expert testimony was required to prove a violation of federal cybersquatting law (15 U.S.C. § 1125(d)) and of the Lanham Act (15 U.S.C. § 1125(a)). The trial court denied the motions, indicating it would hear the testimony and decide the proper weight to accord it.
On appeal, Nazarian challenges the denial of all three motions, but provides legal analysis only with respect to the third motion. To demonstrate error, an appellant must present meaningful legal analysis supported by citations to authority and citations to facts in the record that support the claim of error. (In re S.C. (2006) 138 Cal.App.4th 396, 408; see also Berger v. California Ins. Guarantee Assn. (2005) 128 Cal.App.4th 989, 1007 [argument forfeited when parties "fail to make a coherent argument or cite any authority to support their contention"].) Accordingly, we address only the third motion.
As to that motion in limine, appellant cites only authority relating to violations of the Lanham Act and the cybersquatting law, neither of which formed the basis for plaintiff's claims in this action. "When an issue is unsupported by pertinent or cognizable legal argument it may be deemed abandoned and discussion by the reviewing court is unnecessary. [Citations.]" (Landry v. Berryessa Union School Dist. (1995) 39 Cal.App.4th 691, 699-700.) In any event, the trial court did not err in denying a motion irrelevant to the case at hand.
2. The Sufficiency of the Evidence
a. The Standard of Review
Appellant asserts that the findings of the trial court are not supported by substantial evidence, in that BHE has neither trademarked its name nor demonstrated that it has acquired secondary meaning, and there was no evidence that he acted in bad faith in registering and keeping the domain name. To the extent that these issues required proof under the claim actually asserted by BHE, we review the trial court's finding with deference.
Appellant relies in part on claims that the court should not have considered certain evidence, for example, by asserting that certain evidence was uncorroborated. Issues of credibility and weight are uniquely within the province of the trier of fact; here the trial court made express determinations of the credibility of the witnesses, which we will not disturb.
"'When a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.'" (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881; accord, Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 503.) "'[W]e have no power to judge of the effect or value of the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to resolve conflicts in the evidence or in the reasonable inferences that may be drawn therefrom.'" (Leff v. Gunter (1983) 33 Cal.3d 508, 518 [quoting Overton v. Vita-Food Corp. (1949) 94 Cal.App.2d 367, 370].) "Our role is limited to determining whether the evidence before the trier of fact supports its findings. (Reddy v. Gonzalez (1992) 8 Cal.App.4th 118, 123." (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 766.)
b. The Claim At Issue
The single count of the complaint before the court was for violation of California's Unfair Competition Law (UCL), Business and Professions Code, section 17200 et seq. As alleged in the complaint, BHE sought injunctive relief under section 17203 on the grounds that Nazarian's acts were unlawful and likely to confuse and deceive consumers.
The purpose of the UCL "is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services." (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.) The UCL prohibits any "unlawful, unfair or fraudulent business act or practice." (Bus. & Prof. Code, § 17200.) "Because [the UCL] is written in the disjunctive, it establishes three varieties of unfair competition - acts or practices which are unlawful, or unfair, or fraudulent." (Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632, 647.) As described in the complaint, two of the prongs were at issue: unlawful acts and fraudulent acts.
Section 17200's "unlawful" prong "borrows violations of other laws . . . and makes those unlawful practices actionable under the UCL." (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1505.) "'[V]irtually any law or regulation - federal or state, statutory or common law - can serve as [a] predicate for a [section] 17200 "unlawful" violation.' [Citation.]'" (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 681; see also Ticconi v. Blue Shield of California Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 539.)
A business practice is "fraudulent" within the meaning of section 17200 if it is "likely to deceive the public. [Citation.] It may be based on representations to the public which are untrue, and '"also those which may be accurate on some level, but will nonetheless tend to mislead or deceive. . . . A perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under"' the UCL. [Citation.] The determination as to whether a business practice is deceptive is based on the likely effect such practice would have on a reasonable consumer. [Citation.]" (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1471.)
After trial, the court found a violation of both prongs:
"Upon a review of all the evidence, the court finds that Defendant is in violation of the sections protecting entities from cybersquatters and unfair business practices, prohibiting the registration of brand names as internet domain names in order to make the owners buy back the ability to do business under their own names. The court finds that BeverlyHillsEscrow.com is confusingly similar to Beverly Hills Escrow, and further finds a bad faith intent by Defendant in acquiring the domain name and demanding payment from the plaintiff, the owner of the company with that name. . . . The Court finds that the public is highly likely to be deceived by defendant's confusingly similar domain name and further finds that based on the testimony of Lola Lavoy, plaintiff has established a secondary meaning to the name Beverly Hills Escrow, a corporation conducting business in Beverly Hills and surrounding areas for over 60 years."
Unlawful Business Practices
Nazarian argues that BHE failed to prove a violation of two federal statutes, presumably asserting that this failure prohibits relief based on the unlawful prong of the UCL. We need not reach this issue, as the findings under the fraud prong fully support the injunctive relief ordered by the trial court. As to that finding, we find the evidence sufficient.
We presume this is the argument, as Nazarian's brief contains no citation to the UCL.
Neither in the trial court nor in this court did Nazarian challenge BHE's legal standing to assert this claim in the absence of proof of some form of economic injury, (See Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322-325.) As the Supreme Court has made clear, this is a factual question: "[t]here are innumerable ways in which economic injury from unfair competition may be shown." (Id. at p. 323.) Without appellant discussing the issue, or providing a basis for analysis, any claim he might have asserted is waived. (Behr v. Redmond (2011) 193 Cal.App.4th 517, 538.)
Fraudulent Business Practices
1. Secondary Meaning
Nazarian correctly asserts that the words Beverly Hills and Escrow are words in common use, and are therefore entitled to protection only if their use as the name of the company has acquired a secondary meaning. "It is hornbook law that geographical, generic, or descriptive words may not be exclusively appropriated for the purposes of a trade name, but if the name acquires a secondary meaning, equity will grant protection appropriate to the circumstances. (See, e.g., Academy (1940) supra, 15 Cal.2d 685, 688-689; Hair v. McGuire (1961) 188 Cal.App.2d 348, 352-353 10, and cases there cited.) "'The phrase "secondary meaning," as thus used . . . means . . . a subsequent significance added to the previous meaning of the designation and becoming in the market place its usual and primary significance . . . . The issue . . . is whether or not in fact a substantial number of present or prospective purchasers understand the designation, when used in connection with goods, services or a business, not in its primary lexicographical sense, but as referring to a particular person or association.' (Rest., Torts, § 716, com. b.)" (Ball v. American Trial Lawyers Assn. (1971) 14 Cal.App.3d 289, 302 (Ball); see also Cytanovich Reading Center v. The Reading Game (1984) 162 Cal.App.3d 107, 113 ["[I]f the . . . services [of the company] are known to the public by [a particular] name, . . . any imitation which has the effect of [confusing] buyers . . . may be enjoined as unfair competition'" italics omitted].)
As a matter of California law, BHE was presumed to have the exclusive right to use as a trade name its corporate name, as well as "any confusingly similar trade name" as a result of the filing of its articles of incorporation. (§ 14415.) "('Under the California Trade Name Statute, Cal. Bus. & Prof. Code, §§ 14400-14416, the first entity to file articles of incorporation . . . and use the corporate name set forth in the articles or certificate, is entitled to a presumption that it has an exclusive right to use that name within California.') (Emphasis added.)" (Rearden LLC v. Rearden Commerce, Inc. (N.D. Cal., 2009) 597 F.Supp.2d 1006, 1016.) This presumption affects the burden of production, and thus placed on Nazarian the obligation to present evidence that the name was not protected. He presented no such evidence.
Appellant cites a number of cases from other federal districts concerning the standards for showing secondary meaning and likelihood of confusion. While the Legislature, in adopting the Model State Trademark Law (§ 14200 et seq.) in 2007, did make state law more consistent with federal law and thus allowed courts to consider federal law as persuasive authority, the cases cited compel no different conclusions here. As discussed herein, recent federal authority is consistent with the trial court's ruling.
Moreover, the issue of secondary meaning is one of fact. (California Western School of Law v. California Western University (1981) 125 Cal.App.3d 1002, 1009.) Here, the court's finding was supported by the testimony of Ms. Lavoy concerning her conduct of the business and the understanding of her customers, as well as the unrebutted presumption established by law.
Likelihood of Deception
To prevail, BHE was required to demonstrate the likelihood of deception of the public. Where the names are identical, as they are here, the court may justifiably infer that there is such a likelihood. (See, e.g., Cowles Magazines and Broadcasting v. Elysium, Inc. (1967) 255 Cal.App.2d 731,738.)
There need be no direct competition between the parties, nor need there be injury that has already occurred to support a finding of likelihood of deception. So long as the public is likely to identify the acts of the second user as being connected with the first because of the name, the reputation of the first user is subject to abuse by the second, who has no reason to protect that reputation or the goodwill of the business. "'This is an injury, even though the borrower does not tarnish it, or divert any sales by its uses; for a reputation, like a face, is the symbol of its possessor and creator, and another can use it only as a mask.' (Hand, J., in Yale Electric Corp. v. Robertson (2d Cir. 1928) 26 F.2d 972, 974.)" (Ball, supra, 14 Cal.App.3d 289 at pp. 304-305.) See also Academy of Motion Picture, etc. v. Benson (1940) 15 Cal.2d 685, 691-692 [not necessary for parties to be in competitive business or for injury to have occurred by time of trial].)
In fact, as Delshad testified, consumers were deceived because, on entering the company's name on the web, they found an indication that the site was under construction, causing them difficulty in finding the actual company.
Recent federal cases do not compel a different analysis. In Rearden LLC v. Rearden Commerce, Inc., supra, 597 F.Supp.2d at p.1018, the court discussed the relevant factors: "The Ninth Circuit has identified eight factors relevant to determining whether confusion is likely: (1) strength of the mark; (2) proximity of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) defendant's intent in selecting the mark; and (8) likelihood of expansion of the product lines. See AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir.1979) [(Sleekcraft)]. The Ninth Circuit analyzes both federal and state trademark claims using these 'Sleekcraft factors.' See Jada Toys[, Inc. v. Mattel, Inc., 518 F.3d 628,] 632 [(9th Cir. 2008)]. A likelihood of confusion determination may rest on all eight factors or, alternatively, on only those factors that are most pertinent. See Surfvivor Media, Inc. v. Survivor Productions, 406 F.3d 625, 631 (9th Cir. 2005) ('[T]he test is a fluid one and the plaintiff need not satisfy every factor, provided that strong showings are made with respect to some of them.'); see also Brookfield [Comm. Inc. v. West Coast Ent. Corp., 174 F.3d 1036,] 1054 [(9th Cir. 1999)]. In assessing the likelihood of confusion to the consuming public, the standard used by the courts is 'the typical buyer exercising ordinary caution.' Sleekcraft at p. 353." The most pertinent factor here is the similarity—indeed the identity—of the marks; the evidence also supports the trial court's findings concerning the strength of the mark based on more than 60 years in business in the same area, along with significant efforts by Levoy to make the mark known in the relevant community.
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Intent
To the extent that a showing of Nazarian's intent was required, the court made a finding which was supported by substantial evidence. Nazarian asserts that there is no evidence that he knew of BHE's use at the time of his registration, and that there is no evidence of bad faith. The record does not support that assertion.
First, the evidence establishes that Nazarian made insufficient efforts to determine whether the name was in use, checking only to see if the domain name had been registered. This effort must be contrasted with that found sufficient to establish good faith in Schwartz v. Slenderella Systems of California, Inc. (1954) 43 Cal.2d 107, 111-112, where the defendant instituted a nationwide search, sought advice of counsel, and acted in a situation where it was unlikely that his purpose was to take advantage of another's business reputation. Here, Nazarian, a self-admitted cybersquatter who had registered a variety of names, neither undertook a search nor obtained advice of counsel; in fact, he failed even to look in the local telephone directory.
Moreover, the court's finding of bad faith turned in part on the testimony establishing that Nazarian refused to relinquish the name when he did become aware of BHE; this continued assertion of right was an appropriate basis for injunctive relief: "Relief has been granted against acts of the later user productive of deception or confusion without regard to his actual intentions. (MacSweeney Enterprises v. Tarantino (1951) 106 Cal.App.2d 504, 513-514.) The basis for such relief has sometimes been characterized as 'constructive fraud.' (Visser v. Macres (1963) 214 Cal.App.2d 249, 256-257.) Similar types of implicit legal characterizations or rationalizations may be drawn from cases where the court has found 'commercial hitch-hiking which the law finds offensive' (Bard-Parker Co. v. Crescent Mfg. Co. (1940) 174 Misc. 356, 360 [20 N.Y.S.2d 759, 762].) '"Indeed there is a kind of fraud, as courts of equity have long perceived, in clinging to a benefit which is the product of misrepresentation, however
innocently made. . . ."' (Stork Restaurant v. Sahati (9th Cir. 1948) 166 F.2d 348, 360;
see also Brooks Bros. v. Brooks Clothing of California (S.D. Cal. 1945) 60 F.Supp. 442, 455-456, affd. (9th Cir. 1947) 158 F.2d 798.)" (Ball, supra, 14 Cal.App.3d 289 at p. 304.)
DISPOSITION
The judgment is affirmed. Respondent is to recover its costs on appeal.
ZELON, J.
We concur:
PERLUSS, P.J.
JACKSON, J.