Opinion
Civil Action No. 05-5506.
July 10, 2007
Opinion and Order
Before the Court is plaintiff Ramada Worldwide Inc.'s ("Plaintiff" or "Ramada") motion for summary judgment on liability and damages as to Counts One, Three, Five and Seven of Plaintiff's Complaint ("Motion for Summary Judgment") against defendants Sayo, Inc. ("Sayo") and Sam Yono ("Yono") (collectively, with Sayo, "Defendants"), and to dismiss Defendant Sayo's Counterclaim. In response to Plaintiff's motion, Defendants filed a cross motion to amend/correct their answer and counterclaim ("Cross Motion"). The Court decides these motions pursuant to Federal Rule of Civil Procedure 78, without oral argument. For the reasons provided below, Defendants' Cross Motion is denied and Plaintiff's Motion for Summary Judgment is granted as to liability and denied in part as to damages.
BACKGROUND
Plaintiff is a corporation organized and existing under the laws of the State of Delaware with its principal place of business in Parsippany, New Jersey. (Pl.'s Statement of Material Facts (hereafter "PSMF") ¶ 1.) Plaintiff has the exclusive right to sublicense the use of various trade names and service marks, including but not limited to, logos and derivations of the "Ramada Marks." Id. Plaintiff also has rights to the distinctive Ramada(r) System, which provides hotel services to the public under the Ramada name and certain services to its licensees. (PSMF ¶ 6.) Plaintiff's franchise system markets, promotes and provides services to lodging franchisees. (PSMF ¶ 10.) Pursuant to individual license agreements, Plaintiff allows its franchisees to utilize the Ramada Mark and promote the Ramada brand name. Id. The hotels that operate as part of the Ramada franchise system are all independently owned and operated. (PSMF ¶ 12.)
These services include a centralized reservation system, advertising, publicity, and training services. (PSMF ¶ 6.) Plaintiff also has developed recognition of the Ramada Mark throughout the United States and associated valuable goodwill.
Defendant Sayo is a corporation organized and existing under the laws of the State of Michigan, that maintains its principal place of business in Michigan. Defendant Yono, a citizen of Michigan, is the owner and president of Sayo. (PSMF ¶ 4; Yono Dep. 224:17-18, Feb. 12, 2007.) Effective June 9, 2000, Plaintiff entered into a license agreement with Defendant Sayo ("License Agreement") for the operation of a 389-room Ramada guest lodging facility in Southfield, Michigan, Site No. 5059 ("Facility"). (PSMF ¶ 15; License Agreement, Workman Aff., Ex. A.) Defendant Yono provided Plaintiff with a personal guaranty ("Guaranty") of Defendant Sayo's obligations under the License Agreement. (See Pl. Br. at 1; Guaranty, Workman Aff., Ex. B.) Pursuant to the Guaranty, upon default by Defendant Sayo under the License Agreement, Defendant Yono would "immediately make each payment and perform or cause Licensee [Defendant Sayo] to perform, each unpaid or unperformed obligation of Licensee [Defendant Sayo] under the Agreement." (Guaranty, Workman Aff., Ex. B.)
Pursuant to section 18.4 of the License Agreement, Defendant Sayo was authorized to operate only 200 of the 389 rooms in the Facility. (PSMF ¶ 17.) The other 189 rooms were excluded, subject to renovation by Defendant Sayo and inspection and approval by Plaintiff ("Excluded Rooms"). (PSMF ¶ 17; License Agreement, Workman Aff., Ex. A.) The Excluded Rooms were on floors nine and below and were rented to extended stay guests as opposed to the rooms on the higher floors, which were authorized by Plaintiff for occupancy by Ramada guests. (PSMF ¶ 18.) Pursuant to the License Agreement, the Excluded Rooms guests were not permitted access to the Facility. (License Agreement, Workman Aff., Ex. A.) Defendant Sayo was also to operate "a separate front desk/registration/cashier facility and telephone switchboard for the Excluded Rooms guests." (PSMF ¶ 19; License Agreement, Workman Aff., Ex. A at 20.) Defendant Sayo was required to make certain periodic payments to Plaintiff for royalties, marketing fees, service assessments, taxes, interest, reservation system user fees, annual conference fees, and other fees (hereafter "Recurring Fees") (PSMF ¶ 23; License Agreement, Workman Aff., Ex. A at 8-9.) Additionally, Defendant Sayo was to make certain renovations to the Facility, operate the Facility in compliance with Plaintiff's system standards, and achieve and maintain certain scores on periodic quality assurance inspections conducted by Plaintiff. (See License Agreement, Workman Aff., Ex. A at 2, 8; Pl.'s Br. at 4; PSMF ¶ 21.)
Pursuant to section 11.2 of the License Agreement, Plaintiff was permitted to terminate the agreement, with notice, upon Defendant Sayo's failure to meet its obligation in the following instances: (1) to pay Plaintiff when a payment was due; (2) to remedy any other default of its obligations or warranties under the License Agreement within 30 days after receipt of written notice from Plaintiff specifying one or more defaults under the License Agreement; and/or (3) receipt of two or more notices of default under the License Agreement in any one year period, whether or not the defaults were cured. (See License Agreement, Workman Aff., Ex. A at 12; Pl.'s Br. at 4.)
As to liquidated damages, section 12.1 of the License Agreement states the following:
If we [Plaintiff] terminate the License under section 11.2, or you [Defendant Sayo] terminate this Agreement . . . you will pay us within 30 days following the date of termination, as Liquidated Damages, an amount equal to the sum of accrued Royalties and RINA Services Assessment Fees during the immediately preceding 24 full calendar months . . . Liquidated Damages are paid in place of our claims for lost future Recurring Fees under this Agreement. (License Agreement, Workman Aff., Ex. A at 14 ¶ 12.1.)
Additionally, section 18.3 of the License Agreement provides that "Liquidated Damages payable upon Termination will not exceed One Hundred and Thirty-Three Thousand and Four Hundred Dollars ($133,400.00) . . ." Id. at 20.
As permitted, pursuant to sections 3.8 and 4.8 of the License Agreement, Plaintiff conducted an audit of the Facility's books and records on April 19, 2004. (Pl.'s Br. at 5; PSMF ¶ 40.) By letter dated April 30, 2004, Plaintiff forwarded Defendant Sayo the Franchise Audit Report. (April 2004 Report, Workman Aff., Ex. C.) The report identified various deficiencies at the Facility and account discrepancies. Id. According to the report, Defendant Sayo had significantly underreported its gross room revenue to Plaintiff. (Id.; see also Pl. Br. at 5.) As documented, Plaintiff alleges that for the period of June 2001 through February 2004, Defendant Sayo reported $1,359,088 in gross room revenue to Plaintiff, however, the gross room revenue recorded by Defendant Sayo in its own system was $2,513,523. (April 2004 Report, Workman Aff., Ex. C at 3.) As a result of the April 2004 audit, Plaintiff reported that Defendant Sayo owed Plaintiff $129,244.18 in Recurring Fees. Id.
For example, Plaintiff's April 30, 2004 letter included the following notice: "Please be advised that Section 18.4 of your License Agreement states the excluded rooms will operate a separate front desk/registration facility and telephone switchboard. During your audit it was noted that none of the aforementioned requirements were met. In addition it was noted that the Ramada rooms had been used for long-term guests and charges for long-term guests were on Ramada folios." (April 2004 Report, Workman Aff., Ex. C at 2.)
Based on the estimated $1,154,435, the difference between Defendant Sayo's reported and actual gross revenue from June 2001 through February 2004, the Recurring Fees owed were calculated to be $98,126.96 (8.5% of $1,154,435), plus accrued interest and the cost of the audit. (April 2004 Report, Workman Aff., Ex. C at 3; Pl.'s Br. at 6.)
A handwritten and unsigned letter on the Facility's stationary entitled "Response to Audit," dated April 19, 2004, was forwarded to Plaintiff. (April 19, 2004 Response Letter, Workman Aff., Ex. E.) Plaintiff's allege that Defendant Sayo forwarded this letter in an attempt to explain the variances in its gross room revenue. (Pl.'s Br. at 6.) This letter includes the following statement: "The main reason for adjustments to room revenue and long term stays are often when individuals are located on Ramada floors and not on the lower un-renovated rooms." Further, Defendants stated that they "believe that even though documentation of proof of adjustments were made, that these adjustments were proper and that the figures reported to Ramada were accurate in number and intent." (April 19, 2004 Response Letter, Workman Aff., Ex. E at 1-2.)
By letter dated December 29, 2004, Plaintiff formally notified Defendants that Plaintiff was terminating the License granted under the License Agreement. (See December 29, 2004 Letter, Workman Aff., Ex. J.) In the letter, Plaintiff also demanded immediate payment of liquidated damages in the amount of $133,400 and "all Recurring Fees and other charges due under the Agreement through the date you [Defendants] complete the de-identification process." Id. Plaintiff alleges that after receiving the April 2004 Audit Report, Defendant Sayo "simply stopped paying Recurring Fees." (Pl.'s Br. at 7.)
As of December 29, 2004, Plaintiff estimated Defendant owed $171,102.43 in Recurring Fees. (See December 29, 2004 Letter, Workman Aff., Ex. J at 1.)
Defendant Sayo disputed the amount of Recurring Fees owed in a letter dated January 18, 2005, sent by its attorney Thaddeus M. Stawick. (January 18, 2005 Letter, Workman Aff., Ex. G at 1.) At that time, Defendants indicated that the elimination of the "erroneous calculations as well as subsequent interest, indicates that the most that is owed is the amount of $29,735.84." Id. Defendants argued that "Ramada has breached the terms and conditions of the License Agreement by failing to provide reservations and referrals sufficient to justify the recurring fees and other charges and improperly removing Sayo, Inc. [Defendant Sayo] from the reservation system." Id. Additionally, in Defendants' January 18, 2005 Letter, it is stated that Defendant Sayo "has no intention of deidentifying as a Ramada until such time [that] it has had an opportunity to meet with representatives of Cendant/Ramada to review and discuss the erroneous calculations of recurring fees and other charges and to discuss the lack of services and cooperation." Id. at 2.
Defendants claim that removal from the reservation system was particularly detrimental since it was during the time that Defendant Sayo was undergoing substantial repairs as a result of vandalism to the Facility in December 2003. (January 18, 2005 Letter, Workman Aff., Ex. G.)
On November 17, 2005, Plaintiff filed a Verified Complaint seeking the following relief: "(1) a permanent injunction and damages for trademark infringement pursuant to the Lanham Act; (2) an accounting of all revenue derived as a result of operating the Facility through and with the Ramada Marks; (3) liquidated damages in the amount of $133,400.00; (4) an alternative claim for actual damages; (5) unpaid Recurring Fees; (6) an alternative claim for unjust enrichment; and (7) liquidated damages and Recurring Fees from Yono pursuant to the Guaranty." (Pl.'s Br. at 8; Pl.'s Compl.)
Plaintiff has submitted a Motion for Summary Judgment on liability and damages as to Counts One, Three, Five and Seven of its Complaint, and dismissing Defendant Sayo's Counterclaim for breach of contract and violation of the New Jersey Franchise Practices Act. In response, Defendants filed a Cross Motion, requesting to amend their answer and counterclaims. This Opinion will first address Defendants' Motion to Amend and will subsequently evaluate Plaintiff's Motion for Summary Judgment.
DISCUSSION
I. DEFENDANTS' CROSS MOTION TO AMEND ANSWER AND COUNTERCLAIMS
Legal Standard
Pursuant to Federal Rule of Civil Procedure 15(a), leave of court to amend pleadings "shall be freely given as justice so requires." Fed.R.Civ.P. 15(a). Further, Rule 15(a) encompasses amending an answer to include an affirmative defense. Charpentier v. Godsil, 937 F.2d 859, 863-64 (3d Cir. 1991). Similarly, leave to amend to add a counterclaim may be granted if the pleader has omitted the counterclaim "through oversight, inadvertence, or excusable neglect, or when justice requires." Fed.R.Civ.P. 13(f). Whether to allow such amendments is within the discretion of the court. Lorenz v. CSX Corporation, 1 F.3d 1406, 1413-14 (3d Cir. 1993) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230 (1962)). As such, although the rule requires that leave to amend be "freely given," it is appropriate to deny such a request in the event that the court finds "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, or futility of the amendment." Id.It has been established in the Third Circuit that "prejudice to the non-moving party is the touchstone for the denial of an amendment." Cornell Co. v. Occupational Safety Health Review Comm'n, 573 F.2d 820, 823 (3d Cir. 1978). While mere delay is insufficient to constitute denial of leave to amend, a delay in asserting an amendment may cause prejudice sufficient to warrant such a denial. Phillips v. Borough of Keyport, 179 F.R.D. 140, 144 (1998). "As a practical matter, however, any delay in asserting an affirmative defense for a significant period of time will almost invariably result in some `prejudice' to the nonmoving party." Advocat v. Nexus Indus., Inc., 497 F.Supp. 328, 331 (D.Del. 1980). Thus, the proper standard requires balancing the length of the delay against the resulting prejudice. Id. Moreover, the court should balance concerns of possible prejudice to the non-moving party against the moving party's reason for delay in seeking to amend. Coventry v. United States Steel Corp., 856 F.2d 514, 520 (3d Cir. 1988) (citing Adams v. Gould, Inc., 739 F.2d 858, 868-69 (3d Cir. 1984), cert denied, 469 U.S. 1122, 105 S. Ct. 806, 83 L.Ed. 2d 799 (1985)). Prejudice to the non-moving party is greater when the amendment requires a reopening of discovery and less when application of a new issue of law to already existing facts will facilitate a ruling. Harrison Beverage Co. v. Dribeck Imps., Inc., 133 F.R.D. 463, 469 (D.N.J. 1990).
Some courts have even held that "undue delay which is not satisfactorily explained is equivalent to bad faith." Phillips, 179 F.R.D. at 149 (citing Rose Hall, Ltd. v. Chase Manhattan Overseas Banking Corp., 93 F.R.D. 858, 865 (D.Del. 1982)).
Analysis
Defendants originally asserted the following affirmative defenses: (1) "[P]laintiff's termination of defendants' franchise was without good cause;" and (2) "Plaintiff is estopped to assert its claims as a result of wrongful conduct." (Defs.' Ans. at 10.) In addition, the original counterclaims raised by Defendants include a claim for breach of the franchise agreement and a claim for violation of the New Jersey Franchise Practices Act. (Defs.' Countercl. at 1-2.)
Defendants withdrew their counterclaim filed under the New Jersey Franchise Protection Act, N.J.S.A. 56:10-1. (Defs.' Br. at 13 ("Sayo . . . hereby withdraws any claim of FPA violation."))
At this point in time, Defendants seek to amend their answer to include three additional affirmative defenses and two counterclaims. Defendants wish to include the following affirmative defenses: (1) "Plaintiff breached the covenant of good faith and fair dealing and said breach released [D]efendants of any obligations to the [P]laintiff they may have had;" (2) "Plaintiff violated the Federal Trade Commission's Franchise Rule in dealing with the [D]efendants;" (3) "Plaintiff violated the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq." (Defs.' Proposed Am. Answer and Countercl. at 10.) Additionally, Defendants' proposed counterclaims include a claim for violation of the implied covenant of good faith and fair dealing and a claim under the New Jersey Consumer Fraud Act. Id. at 11.
Plaintiff argues that Defendants' motion to amend should be denied because it is untimely and the proposed amendment is futile. (Pl.'s Reply Br. at 8-9.) Specifically, Plaintiff asserts that leave to amend should be denied because the affirmative defenses and counterclaims Defendants wish to include are "futile and the delay is inexcusable." Id at 6. Plaintiff argues that Defendants offer no explanation for their delay in seeking to amend. Id. at 7. Aside from the last deposition of Defendant Sayo, which took place in February, 2007, discovery closed in August, 2006. Id. at 1. (See also Pretrial Sched. Order, dated Dec. 13, 2006, Docket Entry 6.)
Defendants contend that leave to amend should be granted because there is "no undue delay nor undue prejudice." (Defs.' Br. at 11.) In addition, Defendants assert that the counterclaim regarding breach of the covenant of good faith and fair dealing is "another form of the contractual breach already pled." Id. at 11-12. A covenant of good faith and fair dealing is implied in every contract. See Wilson v. Amerada Hess Corp., 168 N.J. 236, 773 A.2d 1121 (2001) (citing Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 690 A.2d 575 (1997)). "[I]n New Jersey `a party to a contract may breach the implied covenant of good faith and fair dealing in performing its obligations even when it exercises an express and unconditional right to terminate.'" Wilson, 168 N.J. at 244 (quoting Sons of Thunder, Inc., 148 N.J. at 422.) In Wilson, the Supreme Court of New Jersey noted that "[a]though the implied covenant of good faith and fair dealing cannot override an express term in a contract, a party's performance under a contract may breach that implied covenant even though that performance does not violate a pertinent express term." 168 N.J. at 244 (quoting Sons of Thunder, Inc., 148 N.J. at 419.)
Plaintiff's alleged actions do not present Defendants with a viable defense or counterclaim in this action for a breach of good faith and fair dealing. Further, Defendants' papers do not indicate that Plaintiff violated an express term in the License Agreement. Rather, Defendants allege that the Plaintiff behaved poorly with respect to its obligations pursuant to the License Agreement. (Defs.' Br. at 16.) Additionally, Defendants raise issues and allege bad conduct in reference to events that took place almost a decade ago. For example, Defendants claim that they did not receive the Disclosure Statement for the franchise until more than two months after signing the License Agreement in June 1996. (Cert. of Sam Yono.) Defendants argue that this conduct violated the Federal Trade Commission Act, which requires receipt of the disclosure statement before the execution of a franchise agreement or license. Id. Defendants were certainly aware of such conduct when they filed their answer and during the months thereafter yet such issues have not been addressed until this time.
Defendants note the delay to support their claim and affirmative defense that Plaintiff violated the Federal Trade Commission Act.
The Court notes that Defendants did not raise the defense or assert a counterclaim for a breach of good faith and fair dealing until this time, even though this action was filed against Defendants in late 2005. This Court is not concerned merely with the Defendants' delay in requesting this amendment, but also with the prejudice that would result to Plaintiff if this amendment were granted.
When analyzing what constitutes an "undue delay," the court must balance the burden on the non-moving party against the moving party's reason for delay in seeking the amendment. Coventry, 856 F.2d at 520. In support of its position, Plaintiff relies on Lorenz to assert that leave to amend should be denied because Defendants' delay was unreasonable. Id. at 8. (citing Lorenz, 1 F.3d at 1414) (finding delay to be unreasonable where most of the facts were available to plaintiff before complaint was filed and when plaintiff amended its complaint for the first time). Further, Plaintiff argues that leave to amend should be denied because granting Defendants the opportunity to amend would result in an "increased burden of discovery." (Pl.'s Reply Br. at 8.) Some Third Circuit courts have also recognized that leave to amend should be denied if a court finds "truly undue or unexplained delay." See Heyl Patterson Int'l v. F.D. Rich Hous. of the Virgin Islands, Inc., 663 F.2d 419, 425 (3d Cir. 1981).
See also Harrison Beverage Co. v. Dribeck Imps., Inc., 133 F.R.D. 463, 471 (D.N.J. 1990) (concluding that defendant's explanation for delay in bringing motion to amend three months after discovery closed was unsatisfactory because the delay was insufficiently and inconsistently explained).
Inconvenience caused by a party's delay in moving to amend is not sufficient to warrant denying a motion to amend, but a delay causing undue prejudice to one party does justify such a denial. DVI Fin. Servs., Inc. v. Kagan, 2001 WL 299272 (E.D.Pa.) (citing Furman Lumber, Inc. v. Mountbatten Sur. Co., Inc., No. 96-7906, No. 96-8168, No. 96-8352, 1997 WL 397496, at *4 (E.D.Pa. July 9, 1997). Although Plaintiff fails to specify exactly what additional discovery would be required should leave to amend be granted, Plaintiff asserts that granting leave to amend would result in a "burden on discovery." (Pl.'s Reply Br. at 8.) The Court finds that such a burden constitutes prejudice to the Plaintiff in light of the fact that inclusion of additional defenses and counterclaims suggests that reopening of discovery may be necessary in order to proceed with the case.
In the instant matter, the Court notes that Defendants do not provide any sufficient reason to justify their failure to assert the additional defenses and claims at issue until April, 2007. Instead, Defendants merely state that leave to amend should be granted because there is "no undue delay nor undue prejudice." (Defs.' Br. at 11.) Defendants do not address whether or not Plaintiff would need to conduct additional discovery to refute the allegations raised by the new claim. Id. at 11-12.
Defendants' letter dated April 12, 2006 indicates that Defendant Sayo was previously given an opportunity to amend its pleadings at that time, to include a counterclaim for wrongful termination. (Letter dated April 12, 2006, Docket Entry 7.) On May 10, 2006, an order was entered amending the pretrial scheduling order permitting Defendant Sayo to file an additional counterclaim. (Order dated May 10, 2006, Docket Entry 8.) While the Defendants had the opportunity to include additional defenses and counterclaims at that time, they failed to do so. Instead, Defendants waited approximately eleven months to request permission to raise additional affirmative defenses and two new counterclaims and did not provide a reason for the delay.
Plaintiff contends that Defendants' motion to amend should be denied because the requested amendment is futile. (Pl.'s Reply Br. at 9.) In support of its argument, Plaintiff sets forth two considerations. First, Plaintiff indicates that the six year statute of limitations governing the conduct at issue has expired, as the disclosure statement was received by Defendant in August 1996. (Pl.'s Reply Br. at 11, 16.) See N.J. STAT. ANN. 2A:14-1; D'Angelo v. Miller Yacht Sales, 261 N.J. Super 683, 688 (App.Div. 1993). Second, Plaintiff argues that the New Jersey Consumer Fraud Act is inapplicable to Plaintiff's alleged breach of the License Agreement. Id. at 11. See J R Ice Cream Corp. v. California Smoothie Licensing Corp., 31 F. 3d 1259, 1273 (3d Cir. 1994) (holding that "when an individual or corporation purchases a franchise, it is not a person in a `consumer oriented situation,' and thus the transaction is not covered by the [New Jersey Consumer Fraud] Act"). In J R Ice Cream Corp., the court held that the Consumer Fraud Act is inapplicable to the sale and acquisition of a franchise. J R Ice Cream Corp., 31 F. 3d at 1273.
The Court finds that the statute of limitations has expired.
Although some courts have taken issue with the Third Circuit's somewhat narrow interpretation of the Act, the case has not been overturned. See Kavky v. Herbalife Int'l of Am., 359 N.J. Super. 497, 501, 820 A.2d 677, 679 (App.Div. 2003) (disagreeing with the restrictive interpretation of the Consumer Fraud Act set forth in J R Ice Cream Corp., but agreeing with the judgment rendered).
After a review of the papers and the applicable law, the Court is not convinced that an amendment would be appropriate at this time. The Court notes Defendants' undue delay and failure to cure deficiencies by amendments previously allowed. Defendants have had ample opportunities and time to amend their answer and counterclaim. Discovery has already concluded and additional discovery, which may be required to accommodate Defendants' proposed amendments, would prejudice the Plaintiff in this case. Defendants have not shown that this additional burden on Plaintiff would be justified given the totality of the circumstances. Accordingly, the Court denies Defendants' request for leave to amend.
II. PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
Legal Standard 1. Summary Judgment
Summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A factual dispute is genuine if a reasonable jury could return a verdict for the nonmovant, and it is material if, under the substantive law, it would affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to enable the nonmoving party to carry its burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 318 (1986).
Once the moving party meets the initial burden, the burden then shifts to the nonmovant who must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001). The court's duty is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue as to a material fact. Anderson, 477 U.S. at 249. In doing so, the court must construe the facts and inferences in the light most favorable to the nonmoving party. Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 520 (1991).
2. Breach of Contract
"The interpretation of a contract is a matter of law for the court." Atlantic City Racing Ass'n v. Sonic Fin. Corp., 90 F. Supp. 2d 497, 506 (D.N.J. 2000) (citing Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 707 A. 2d 209, 211 (App. Div. 1998). The essential elements necessary to assert a cause of action for breach of contract are a valid contract, defective performance by defendant, and resulting damages. Coyle v. Englander's, 199 N.J. Super. 212, 223, 488 A.2d 1083, 1088 (App. Div. 1985) (citing Strong v. Commercial Carpet Co., Inc., 163 Ind. App. 145, 322 N.E.2d 387, 324 N.E.2d 834 (Ct.App. 1975). In the instant matter, summary judgment is appropriate for the breach of contract claims as there are no material facts in dispute regarding the License Agreement.
Analysis
Plaintiff submitted a Motion for Summary Judgment on liability and damages as to Counts One, Three, Five and Seven, and to dismiss Defendant Sayo's Counterclaim.
1. Count One — The Lanham Act
Plaintiff contends that it is entitled to summary judgment against Defendants for violation of the Lanham Act. (Pl.'s Br. at 12.) Specifically, Plaintiff argues that the Defendants' unauthorized use of the Ramada trademarks subsequent to Plaintiff's termination of Defendants' License under the License Agreement violated sections 32 and 43(a) of the Lanham Act. Id. Although Defendants have raised issues of fact with regard to peripheral matters, such issues are not material or relevant to the Lanham Act claims. As such, summary judgment is appropriate for Count One, Lanham Act violations.
The Lanham Act protects trademark owners against infringement and unfair competition. See 15 U.S.C. § 1114 (infringement), 15 U.S.C. § 1125 (unfair competition). The overall purpose of the Act is to provide protection for trademarks as well as the public, which runs the risk of being confused or misled as a result of trademark infringement. U.S. Jaycees v. Philadelphia Jaycees, 639 F.2d 134, 142 (3d Cir. 1981). It is important to note that the Act does not require that there be actual confusion; instead, it requires only a likelihood of confusion. Family Circle, Inc. v. Family Circle Assocs., Inc., 332 F.2d 534, 539-40 (3d Cir. 1964). Further, the Lanham Act creates a remedy solely for false descriptions or misrepresentations of products and services in advertising. Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 872 (3d Cir. 1992).
15 U.S.C. § 1114 ("section 32"), 15 U.S.C. § 1125 ("section 43").
Section 32 of the Lanham Act governs "remedies, infringement, and innocent infringement by printers and publishers." 15 U.S.C. § 1114. In order to bring a claim under this section, plaintiff must demonstrate that the use of the mark at issue was unauthorized. U.S. Jaycees, 639 F.2d at 137. Moreover, to prevail on a trademark claim, plaintiff must establish the following: (1) the marks are valid and legally protectable; (2) it owns the marks; and (3) defendant's use of the mark on either goods or services was likely to create confusion in regard to its origin. Opticians Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 192 (3d Cir. 1990) (citing Pedi-Care, Inc. v. Pedi-A-Care Nursing Inc., 656 F. Supp. 449, 453 (D.N.J. 1987); Holiday Inns, Inc. v. Trump, 617 F. Supp. 1443, 1464 (D.N.J. 1985)).
Section 43(a) of the Lanham Act prohibits false designations of the origin of goods or services and false or misleading descriptions of fact, which are likely to cause confusion. 15 U.S.C. § 1125. In order to bring a claim under section 43(a), plaintiff must establish the following: (1) a defendant made false or misleading statements in regard to plaintiff's or another's product(s); (2) there was actual deception or a tendency to deceive a substantial portion of the audience; (3) the deception was material; (4) the goods traveled in interstate commerce; and (5) there is a likelihood of injury. See Ditri, 954 F.2d at 872 (citing U.S. Healthcare v. Blue Cross of Greater Phila., 898 F. 2d 914, 922-23 (3d Cir. 1990), cert denied, 498 U.S. 816 (1990)).
Plaintiff alleges that Defendants' infringement in violation of the Lanham Act began on January 8, 2005 (ten days after termination) and continued through December 7, 2005. (Pl.'s Br. at 19.) As such, Plaintiff requests compensatory damages for Recurring Fees for the period of infringement, treble damages considering defendants' intentional use of the Ramada trademarks, and attorneys' fees. Id. at 19-20. The License Agreement sets forth in detail what is required in terms of Recurring Fees, indemnification procedures, and liquidated damages in the event the License Agreement is terminated under section 11.2. (License Agreement, Workman Aff., Ex. A.)
Plaintiff also argues it is entitled to prejudgment interest at the rate of 1.5% per month (18% per year) on liquidated damages from January 28, 2005 through April 23, 2007 ($53,615.84) and Recurring Fees from December 29, 2004 through April 23, 2007 ($42,603.80).
As Plaintiff indicates, it is well established that termination of a trademark license prohibits the licensee from any further use of the trademark. See Pappan Enter., Inc. v. Hardee's Food Sys., 143 F.3d 800, 805 (3d Cir. 1998); see also S R Corp. v. Jiffy Lube Int'l, Inc., 968 F.2d 371, 376 (3d Cir. 1992) (holding that defendant violated sections 32 and 43(a) of the Lanham Act when it continued to use the Jiffy Lube name after termination of franchise agreement); U.S. Jaycees, 639 F.2d at 143 (concluding that use of the "Jaycees" label after disaffiliation constituted trademark infringement).
In the instant matter, Plaintiff alleges that Defendants failed to pay Recurring Fees owed to Plaintiff and failed to comply with Plaintiff's quality assurance and reporting standards. (PSMF ¶ 63; Pl.'s Br. at 5.) Plaintiff claims that as a result of these deficiencies, it terminated the License Agreement on December 29, 2004. (PSMF ¶ 53; Pl.'s Br. at 7.) In notifying Defendants of the termination, Plaintiff's letter dated December 29, 2004 indicated that Defendants were to "immediately discontinue the use of all trade names, service marks, signs, and other forms of advertising, and other indicia of operation as part of other materials on the premises effectively to distinguish the same from its former appearance as a Ramada . . . within 14 days from receipt of notice." (PSMF ¶ 39.) Nevertheless, Defendants continued to use the Ramada marks until at least December 7, 2005. (PSMF ¶ 68.) Such unauthorized usage constitutes a violation of sections 32 and 43(a) of the Lanham Act because the continued use of the trademark name could potentially confuse and mislead the public, taking advantage of the "Ramada" name when the Defendants are no longer permitted to do so.
The License Agreement allows Plaintiff to terminate in certain situations, one being when Defendants default on payment and fail to cure such default within thirty days. (License Agreement, Workman Aff., Ex. A at 12.)
Defendants justify their failure to de-identify by claiming that Plaintiff breached the License Agreement when it performed several acts including removal of Defendants from the reservation system and being unresponsive when the Facility was vandalized in December, 2003. (Defs.' Br. at 8-9; January 18, 2005 Letter, Workman Aff., Ex. G.) Upon receipt of Plaintiff's letter notifying Defendants of the termination of the License Agreement, Defendants replied stating the following: "[Defendant has] no intention of de-identifying as a Ramada until such time that it has had an opportunity to meet with representatives of Cendant/Ramada to review and discuss the erroneous calculations of recurring fees and other charges and to discuss the lack of services and cooperation." (See Defs.' Br. at 10; January 18, 2005 Letter, Workman Aff., Ex. G at 1.) Specifically, Defendants allege that the Plaintiff engaged in various bad business practices and essentially "wined and dined" Defendants during the early stages of negotiation, promising to "provide assistance [to them] when necessary." (Defs.' Br. at 7.) As a defense to Plaintiff's Lanham Act claim, Defendants argue that the Court should be guided by the clean hands doctrine and refuse to grant Plaintiff's relief in accordance with "principles of equity." Id. at 21; See 15 U.S.C. 1117(a) (explaining when plaintiff is entitled to damages (including under section 1125) and stating that such relief is subject to the provisions of section 1111 and 1114 as well as the "principles of equity."). Further, Defendants argue that the clean hands doctrine instructs that "a court should not grant relief to a wrongdoer with respect to the subject matter in suit." (Defs.' Br. at 21.) However, it is important to note that in the majority of cases Defendants use to support their position, the unclean hands doctrine defense was unsuccessful. (Defs.' Br.)
Specifically, Defendants claim Plaintiff's conduct violated the Federal Trade Commission's Franchise Rule, the New Jersey Consumer Fraud Act, and breached the covenant of good faith and fair dealing implied in the parties' License Agreement. (Defs.' Br. at 21.)
Defendants do not raise any issues of material fact that would warrant denying Plaintiff's motion for summary judgment with respect to Count One, violations of the Lanham Act. Rather, Defendants assert that the unclean hands doctrine should apply and avoid addressing the specific allegations brought against Defendants for trademark infringement pursuant to the Lanham Act. Defendants do allude to the fact that, in their opinion, de-identifying itself would have been extremely burdensome, calling it a sort of "commercial suicide." (Defs.' Br. at 23.) Additionally, Defendants argue that Plaintiff "destroyed [Defendants'] ability to operate" by removing its name from the reservation system, an act Defendants allege was "unfair and deprives Sayo of [the] benefit of its bargain." Id. This allegation does not justify Defendants' failure to de-identify and pay the Plaintiff accrued fees, and thus is not a sufficient defense for the Lanham Act claims at issue.
Although Defendants argue that Plaintiff breached the implied covenant of good faith and fair dealing by terminating the License Agreement, this does not relieve the Defendants of their obligation to de-identify or pay fees owed to Plaintiff. Under contract law, it is clear that when a party to a contract believes that the other contracting party is in breach, it may either stop performance and assume the contract is void or continue its performance and sue for damages. S R Corp., 968 F.2d at 376. Equally clear is the principle that "under no circumstances may the non-breaching party stop performance and continue to take advantage of the contract's benefits." Id. In this matter, there appears to be no dispute as to whether Defendants continued to use the Ramada trademarks after termination of the License Agreement.
See S R Corp., 968 F.2d at 375 (stating that "a franchisor's right to terminate a franchisee exists independently of any claims the franchisee might have against the franchisor.").
While it is necessary to determine damages and fees regarding termination of the License Agreement and assess Defendants' challenges to the audits and assessments, such issues may be addressed separately from the Lanham Act claims at issue.
Despite Defendants' allegation that Plaintiff's removal of Defendants from the reservation system, which resulted in Defendants not receiving any reservations from Plaintiff, was improper, the License Agreement expressly authorized Plaintiff's conduct. (Defs.' Br. at 9.) The License Agreement states that "[Ramada] may suspend the Facility from the Reservation System for any default or failure to pay or perform under this Agreement . . ." (License Agreement, Workman Aff., Ex. A at 13 ¶ 11.4.) Further, as set forth above, the License Agreement authorizes Ramada to terminate same in the event Defendants default on payment owed and do not cure the default in accordance with section 11.1 of the Agreement. Id. at 12. It appears from the record that the only disputed fact is when the Defendants stopped paying royalties and the exact amount owed. (See Defs.' Br.; Defs.' Ans.) These issues concern damages and, taken alone, are not enough to defeat Plaintiff's summary judgment motion. Despite the tangential issues presented in Defendants' brief, the real question presented to the Court is whether Defendants used the Ramada trademark without authorization in a manner that might potentially confuse or mislead the public after the License was terminated.
See S R Corp. v. Jiffy Lube Int'l, Inc., 968 F.2d 371, 375 (3d Cir. 1991) (recognizing that when the terms of a franchise agreement are violated, the franchiser may terminate the relationship).
Aside from the dispute over fees, pursuant to the License Agreement, Plaintiff was authorized to terminate the License Agreement for the following reasons: (1) Defendants did not maintain the accounts, required reports and the system as required by the License Agreements; and (2) Defendants failed quality assurance inspections. (License Agreement, Workman Aff., Ex. A at 11.2.) Plaintiff was allowed to conduct the Quality Assurance audit, which occurred in August, 2004. As set forth above, Plaintiff was also allowed to remove Defendants from the reservation system because Defendants failed to make payments owed to Plaintiff under the License Agreement. See id. at 13 ¶ 11.4. In addition, Plaintiff was allowed to terminate the License Agreement because Defendants were in default and failed to cure their default within thirty days from receiving notice of such default. See id. at 12 ¶ 11.2. Upon termination of the license, Plaintiff was allowed to demand that Defendants de-identify all Ramada trademarks on its facility within fourteen days. In turn, because Defendants failed to de-identify and continued to use the Ramada trademarks when they were no longer authorized to do so, the Defendants violated sections 32 and 43(a) of the Lanham Act.
See License Agreement, Workman Aff., Ex. A at 4 ¶ 3.8 (stating that Ramada has the right to conduct quality assurance inspections of the facility and audit financial and operating books and records relating to the Facility with or without prior notice).
Regardless of the exact amount of Recurring Fees owed, the discrepancies were brought to Defendants' attention, Defendants acknowledge that there was a discrepancy and Defendants did not cure the default. (See January 18, 2005 Letter, Workman Aff., Ex. G at 1.)
Defendants propose an unclean hands doctrine defense to the Lanham Act claims in their brief. (Defs.' Br. at 21.) As the Defendants contend, the district court, in its discretion, may refuse to aid "unclean parties," but there are guidelines that demonstrate what constitutes "unclean." Haft v. Dart Group Corp., 841 F. Supp. 549, 577 (D.Del. 1993). In order to be successful, the defense of unclean hands must establish that the plaintiff "conducted [itself] as to shock the moral sensibilities of the judge." Gaudiosi v. Mellon, 269 F.2d 873, 882 (3d Cir. 1959). The Third Circuit Court of Appeals has established that the conduct must suggest "fraud, unconscionability, or bad faith on the part of the Plaintiff." S R Corp., 968 F,2d at 377 n. 7. Accord Northeast Women's Center, Inc. v. McMonagle, 868 F.2d 1342, 1354 (3d Cir.), cert. denied, 493 U.S. 901, 110 S.Ct. 261, 107 L.Ed.2d 210 (1989) (holding that conduct must be "unconscionable"); Castle v. Cohen, 840 F.2d 173, 178 (3d Cir. 1988) (finding that conduct must be in "bad faith"). Courts apply the doctrine of unclean hands to bar providing relief to a plaintiff where some unconscionable act has occurred that has an "immediate and necessary relation to the equity" the person is seeking. Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 245, 54 S. Ct. 146, 78 L.Ed. 293 (1933).
See also Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369, 1375 (Fed. Cir. 2001) (establishing that to use the unclean hands doctrine, the conduct must be "offensive to the dictates of natural justice.").
See also Pharmacia Corp. v. GlaxoSmithKline Consumer Healthcare, L.P., 292 F. Supp. 2d 594, 610 (D.N.J. 2003) ("[C]ourts do not apply the unclean hands doctrine just because plaintiffs have engaged in some inequitable conduct; rather, the inequitable conduct identified by the defendant must evince a very close nexus to the defendant's own misconduct that initially gave rise to the suit.").
Even after viewing the evidence in the light most favorable to the non-moving party, the Court is not convinced that the Plaintiff's alleged misconduct is egregious or unconscionable, as is required for application of the unclean hands doctrine. In accordance with section 32 of the Lanham Act, the Plaintiff has demonstrated that the Ramada trademark is valid and legally protectable, that Plaintiff owns the trademark and that Defendants' unauthorized use of the mark was likely to cause confusion. See 15 U.S.C. § 1114. As to section 43(a) of the Lanham Act, it is clear that the Defendants' use of Plaintiff's nationally recognized mark would be misleading to the public. See Ditri, 954 F.2d at 872. As discussed, the elements necessary to prevail on Plaintiff's Lanham Act claims are evident and appropriate for summary judgment in this matter. Accordingly, the Court grants Plaintiff's motion for summary judgment as to Count One of Plaintiff's Complaint.
As previously discussed, Defendants have not stated that Plaintiff violated an express term in the License Agreement. In addition, Plaintiff had the right to terminate the License Agreement due to Defendants' defaults. That being said, the Court is satisfied that Plaintiff's termination of the License Agreement at issue was proper and does not constitute a breach of the Agreement. Thus, the Court finds in favor of Plaintiff as to Defendant Sayo's counterclaim for breach of contract. Consequently, the Court dismisses Defendants' First Counterclaim for breach of contract with prejudice.
2. Damages
A. Count One — Damages regarding Lanham Act violations
See Bethlehem Steel Corp. v. United States, 270 F. 3d 135139Int'l Union v. Skinner Engine Co., 188 F.3d 130138 Allied Erecting Dismantling Co. v. U.S.X. Corp.,249 F. 3d 191200Id. Compass Tech., Inc. v. Tseng Labs., Inc., 71 F. 3d 1125 15 U.S.C. § 1117
Several courts have interpreted the 1984 amendment to the Lanham Act to require the award of treble damages in all cases where there has been a finding of intentional infringement. See Fendi S.A.S. Di Paola Fendi E Sorelle v. Cosmetic World Ltd., 642 F. Supp. 1143, 1147 (S.D.N.Y. 1986); See also Chanel Inc. v. Italian Activewear of Fla., Inc., 931 F. 2d 1472, 1475 (11th Cir. 1991) (stating that "if the infringement is intentional . . . § 1117 governs: unless the court finds extenuating circumstances treble damages and attorneys' fees are mandated.").
B. Count Three — Recurring Fees
During discovery, Defendants produced Rate Activity Lists for January 2002 through February 2004 that contain entries showing that Defendant Sayo rented rooms on floors, which were authorized to be used solely for Ramada guests to its extended stay guests. (Pl.'s Br. at 6.) Based on the previously discussed series of events, Plaintiff contends that Defendant Sayo rented the Ramada rooms to extended stay guests, but failed to report the revenue or pay Recurring Fees to Plaintiff. (Pl.'s Br. at 6.)
Plaintiff alleges that Defendants failed to pay Recurring Fees owed to Plaintiff in the amount of $174,230.02. (PSMF ¶ 63.) While Defendants' Answer denies that any Recurring Fees are owed to Plaintiff, Defendants' Brief is silent on this issue. (Defs.' Ans. at 5 ¶ 36.) The record seems to indicate that the Defendants do owe Plaintiff Recurring Fees, but Defendants dispute the amount owed. For example, by letter dated January 18, 2005, Defendants dispute the amount of Recurring Fees owed, but admit that after the elimination of the "erroneous calculations as well as subsequent interest . . . the most that is owed is the amount of $29,735.84." (January 18, 2005 Letter, Workman Aff., Ex. G at 1.) In addition, Defendant Yono notes that Defendants were not provided with the specifics of how the assessment of more than $129,000 in Recurring Fees as of April 2004 was derived. (Cert. of Yono at ¶ 13.) At this time, the Court will not grant summary judgment regarding the damages in the form of Recurring Fees owed. Rather, the Court requests that the parties submit additional documents regarding the issue of calculating damages for the Recurring Fees including the amount, if any, that Defendants have paid toward the Recurring Fees since the January 2005 letter. The Court also requests a breakdown of all outstanding Recurring Fees as well as a formula for how such fees were calculated.
C. Count Five — Liquidated Damages (Defendant Sayo)
In the commercial franchise industry, it is appropriate for a license agreement to contain a liquidated damages clause to be exercised should one of the parties breach or terminate the agreement early. Mobil Oil Corp. v. Flores, 175 F. Supp. 2d 1080 (N.D. Ill. 2001). Further, if the parties negotiate and establish a liquidated damages provision in good faith, the Court should not interfere with the party's contract. Consequently, such a liquidated damages provision will be upheld when the clause "constitutes a reasonable forecast of the provable injury resulting from the breach," and where harm "is incapable or very difficult of accurate estimate." Wasserman's, Inc. v. Middletown, 137 N.J. 238, 249 (N.J. 1994). In franchise agreements, the purpose of a liquidated damages clause is often to allow the franchiser to recoup potential future earnings no longer possible due to the early termination of the parties' license agreement. Ramada Worldwide, Inc. v. Jay-Dharma, L.L.C., 2006 WL 3041080 *6 (D.N.J. 2006).
Parties to a contract will be bound by unambiguous terms of a contract absent a finding of "mistake, fraud, duress, unconscionability, or illegality." See Brokers Title Co., Inc. v. St. Paul Fire and Marine Ins. Co., 610 F.2d 1174 (3d Cir. 1979); Vasquez v. Glassboro Serv. Ass'n, Inc., 83 N.J. 86, 101 102, 415 A.2d 1156, 1164 (1980).
The New Jersey Supreme Court has established that "in commercial transactions between parties with comparable bargaining power, stipulated damage provisions can provide a useful and efficient remedy." Wasserman's Inc., 137 N.J. at 254.
In Ramada Worldwide, Inc. v. Jay-Dharma, L.L.C., this Court awarded Plaintiff liquidated damages in the amount of $196,000.00 after Defendants defaulted as a result of their failure to comply with Ramada's quality assurance requirements in violation of the License Agreement. Ramada Worldwide, Inc., 2006 WL 3041080, at *6. In fact, this Court also found Defendants owed Plaintiff interest on the liquidated damages owed in the amount of $89,523.00. Id. at *7.
Additionally, this Court has on numerous occasions granted summary judgment upholding several other liquidated damages clauses in similar contexts. See, e.g., Howard Johnson Int'l, Inc. v. Heaven On Earth Inns, No. 98-5199 (JCL) (D.N.J. Aug. 8, 2000) (upholding $100,000 liquidated damages clause due to early termination of license agreement); Ramada Franchise Sys., Inc. v. Alexandria Props., L.L.C., No. 97-4912 (JCL) (D.N.J. Mar. 15, 2000) (awarding $350,000 in liquidated damages after early termination of fifteen-year license agreement).
In the instant matter, Defendants' failure to pay outstanding fees and failure to comply with quality assurance requirements, resulted in a default under the License Agreement. (See License Agreement, Workman Aff., Ex. A at 12 ¶ 11.1.) Either default, uncured, permitted Plaintiff to terminate the License Agreement. Id. The provision regarding liquidated damages set forth in section 12 of the License Agreement establishes that in the event the License is terminated, Defendants will pay Plaintiff "within 30 days following the date of termination, an amount equal to the sum of accrued Royalties and RINA Services Assessment Fees during the immediately preceding 24 full calendar months (or the number of months remaining in the unexpired Term at the date of termination, whichever is less)." Id. at 14 ¶ 12.1. Moreover, section 18.3 limits the amount of liquidated damages payable to Plaintiff to $133,400.00 for 200 guest rooms and $750.00 for each room after that not to exceed a total amount of $200,000.00. Id. at 20 ¶ 18.3. The Court finds the liquidated damages provision to be clear and unambiguous, and thus it is appropriate to interpret the provision as a matter of law. In its review, the Court finds the liquidated damages provision to be reasonable in light of the circumstances. Thus, the Court grants summary judgment as to Count Three of Plaintiff's Complaint and requires Defendant Sayo to pay liquidated damages to Plaintiff in the amount of $133,400.00.
D. Count Seven — Liquidated Damages and Recurring Fees (Defendant Yono)
The Guaranty, signed by Defendant Yono, provides that upon default by Defendant Sayo (Licensee) and notice from Plaintiff, Defendant Yono would "immediately make each payment and perform or cause Licensee to perform, each unpaid or unperformed obligation of Licensee under the Agreement." (Guaranty, Workman Aff., Ex. B.) The terms of the Guaranty are unambiguous and Defendant Yono's obligations pursuant to the Guaranty are clear. Accordingly, the Court grants summary judgment in part as to liquidated damages owed to Plaintiff as to Count Seven of Plaintiff's Complaint. As previously discussed, the Court requests additional documents regarding the issue of Recurring Fees. Damages as to Recurring Fees will be assessed pending review of additional submissions by the parties. Defendants Sayo and Yono are jointly and severally liable for liquidated damages and Recurring fees to be assessed.
E. Prejudgment Interest and Attorneys' Fees
Section 17.4 of the License Agreement provides that the "non-prevailing party will pay all costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party to enforce this Agreement or collect amounts owed under this Agreement." (License Agreement, Workman Aff., Ex. A at 19.) As such, Defendants are responsible for paying the reasonable costs, expenses and attorneys' fees incurred by Plaintiff. Plaintiff's motion for attorneys' fees and costs is granted. Pursuant to L. Civ. R. 54.2, the Court requests that Plaintiff submit an application for the Court's review, detailing how attorneys' fees and costs were calculated, within fourteen (14) days of the date of this Order.
Pursuant to section 7.3 of the License Agreement and New Jersey law, the Court finds that Plaintiff is also entitled to prejudgment interest at the rate of 1.5% per month as to Liquidated Damages assessed, and the Recurring Fees owed, to be later determined.
F. Remaining Counts
Plaintiff indicated that in the event the Court granted Plaintiff's motion in its entirety, Plaintiff would dismiss the Second, Fourth, and Sixth Counts of its Compliant "thus resolving all aspects of this case." (Pl.'s Br. at 8.) Count Two of the Complaint is for restitution and the alleged disgorgement of profits. Count Four is for actual damages, in the event the Court does not find Defendants liable for liquidated damages. As the Court has found Defendants liable for liquidated damages, Count Four is moot. Count Six is for unjust enrichment and damages, which have already been addressed by this Court and are thereby encompassed in Counts One and Five. Given that the only remaining aspects of Plaintiff's motion to be resolved are the Court's findings as to damages regarding Recurring Fees, the Court sua sponte shall dismiss the Second, Fourth, and Sixth Counts of the Complaint at this time. Upon the final determination of these damages, all aspects of this case will be resolved.
Conclusion
For the foregoing reasons, the Court denies Defendants' Cross Motion to amend the answers to the Complaint and add counterclaims. The Court grants Plaintiff's Motion for Summary Judgment as to liability on all Counts, and for damages as to Counts One and Five. For a determination on damages as to Counts Three and Seven, the Court requests that the parties submit additional information to enable the Court to assess allegations regarding Recurring Fees. For the reasons previously stated, Counts Two, Four and Six of the Complaint are dismissed with prejudice. In addition, the Court hereby dismisses Defendants' First Counterclaim for breach of contract with prejudice.
The exact amount of the damages under the Lanham Act will be verified as discussed.