Opinion
00-CV-0055E(Sc)
June 28, 2002
MEMORANDUM and ORDER
Plaintiffs AFM Corporation ("AFM") and Thermal Foams, Inc. ("Thermal Foams") commenced this action January 13, 2000 alleging that defendants Therma Panel Homes Corporation ("TPH") and Richard Lewin ("Lewin") were using plaintiffs' trademarks, trade names, promotional literature and technical data in violation of the Lanham Act, 15 U.S.C. § 1051-1127. On August 23, 2000 the parties entered into a Settlement Agreement and stipulated to the entry of a Permanent Injunction, barring defendants from unlawfully using plaintiffs' intellectual property, which injunction this Court issued September 11, 2000. The Settlement Agreement contained the following relevant provisions.
"If either TPH or Lewin violate the Permanent Injunction or any of the terms of this Agreement, the Parties agree that a judgment may be entered against TPH and Lewin in the amount of $35,000, which amount represents attorneys' fees incurred by AFM and Thermal Foams as of the date of this Agreement and an estimate of the profits TPH and Lewin have made as a result of their improper conduct as of the date of this Agreement. Any such judgment may be entered upon ten (10) days notice to TPH and Lewin. * * *
"TPH and Lewin recognize that any violation of the Permanent Injunction subjects them to both civil and criminal contempt proceedings in any jurisdiction in which the violation occurs. In any such contempt proceeding, TPH and Lewin agree not to procedurally attack the correctness or enforceability of the Permanent Injunction. TPH and Lewin agree that the only issue to be decided in any such contempt proceeding is whether there has been a violation. If AFM or Thermal Foams show [sic] by a preponderance of the evidence that a violation has occurred, TPH and/or Lewin shall be deemed to be in violation of the order and in contempt of court. Should TPH and/or Lewin be found to be in contempt for violation of the Permanent Injunction, AFM and/or Thermal Foams shall be entitled to all reasonable costs and attorneys' fees incurred in connection with such contempt proceeding." Welter Dec. 26, 2000 Aff. Ex. D (Settlement Agreement ¶¶ 2-3).
On December 13, 2000 plaintiffs notified defendants that they would be entering judgment pursuant to paragraph two of the Settlement Agreement — but did not state how defendants had violated the Permanent Injunction. Welter Dec. 26, 2000 Aff. Ex. F (December 13, 2000 Letter from Welter to Lewin). Defendants contacted this Court December 21, 2000 stating that they had not violated the Permanent Injunction and sought a temporary restraining order barring plaintiffs from entering judgment. Plaintiffs responded by stating that they were entitled to enter judgment because defendants' websites www.thermapanel.com and www.thermapanelhomes.com contained plaintiffs' intellectual property in violation of the Permanent Injunction and stated that they would be seeking to hold defendants in contempt of court upon such basis. Welter Dec. 26, 2000 Aff. ¶¶ 10-20. In a Memorandum and Order dated February 2, 2001 this Court, inter alia, denied defendants' request for a temporary restraining order, directed the Clerk of this Court to enter judgment for plaintiffs and, in response to plaintiffs' assertion that they would be seeking to hold defendants in contempt — Welter Dec. 26, 2000 Aff. ¶ 20 —, directed that an evidentiary hearing be held to determine, inter alia, whether defendants were in contempt of court. See AFM Corp. v. Therma Panel Homes Corp., No. 00-CV-0055E(Sc), 2001 WL 118568 (W.D.N.Y. Feb. 2, 2001).
On February 15, 2001 plaintiffs filed a motion to enforce the Permanent Injunction alleging that defendants were continuing to use plaintiffs' intellectual property on their websites www.thermapanel.com and www.thermapanelhomes.com and that plaintiffs had recently discovered that defendants had a third website containing material in violation of the Permanent Injunction — i.e., www.ezsips.com — and requested a temporary restraining order directing that defendants' websites be taken offline immediately. This Court issued such temporary restraining order that day ordering that defendants' websites be taken offline until further order of this Court and directed that the hearing on such motion be held in conjunction with the evidentiary hearing into whether to hold defendants in contempt of court.
Defendants' websites remain offline because they have never requested this Court's permission to allow them back online.
This Court conducted an evidentiary hearing April 5, 2001 to determine whether to hold defendants in civil contempt of court for violating the Permanent Injunction. At the conclusion of such day's hearing, the parties stated their intentions to engage in settlement discussions, as a result of which this Court did not enter a scheduling order setting forth dates for plaintiffs to serve and file proposed findings of fact and conclusions of law in support of a finding of contempt, for defendants to serve and file responding findings of fact and conclusions of law in opposition thereto and for oral argument thereon. Defendants' counsel, John H. Ring, III, Esq., wrote to the undersigned June 25, 2001 stating that settlement negotiations had not been successful and requested that this Court "place this matter down for further proceedings." This Court accordingly issued a scheduling notice August 28, 2001 directing the parties to appear September 7, 2001 to set a date for the completion of the evidentiary hearing.
This Court had been presented with the corporate records of TPH March 16, 2001 and is still in possession thereof. Counsel for TPH are directed to make arrangements to retrieve such records.
Plaintiffs' counsel Joseph J. Welter, Esq. wrote to the undersigned July 26, 2001 stating that they did not desire to elicit further evidence but believed that the April 5, 2001 evidentiary hearing had conclusively established that defendants had repeatedly and willfully violated the Permanent Injunction and requested relief based thereon. Ring wrote to the undersigned August 31, 2001 stating that he was unavailable September 7, 2001 and requested an adjournment. Defendants' counsel Mark S. Carney, Esq. also wrote to the August 31, 2001 stating that he believed that the parties did not desire to present additional evidence and were awaiting a decision by the undersigned. Due to the confusion over the status of this case, this Court scheduled a status conference for March 1, 2002 which was subsequently adjourned to April 12, 2002.
During the April 12, 2002 status conference the parties stated that they had been awaiting a decision by this Court on plaintiffs' request to hold defendants in contempt and motion to enforce the Preliminary Injunction. Plaintiffs, however, had never ordered the transcript of the evidentiary hearing — which is a sine qua non for the preparation and submission of proposed findings of fact and conclusions of law upon which the undersigned would render such decision. Inasmuch as plaintiffs had never ordered the transcript this Court had been unable to issue a scheduling order for the filing of proposed findings of fact and conclusions of law and oral argument thereon, with the result that the request/motion for which the parties were awaiting a decision had never been "submitted."
By April 16, 2002 — i.e., over a year after the evidentiary hearing had been conducted — plaintiffs had still not ordered the transcript thereof, as a result of which this Court issued a scheduling notice expressly directing plaintiffs to order such transcript and set a briefing schedule for the serving and filing of proposed findings of fact and conclusions of law after such transcript had been prepared and filed with the Clerk of this Court. By May 10, 2002, plaintiffs still not having ordered the transcript in response to the April 16, 2002 scheduling notice, this Court issued an Order stating that, if plaintiffs did not order such transcript by June 1, 2002, their request to hold defendants in contempt for violating the permanent injunction/motion to enforce the preliminary injunction would be denied for failure to prosecute.
Plaintiffs did not order the transcript as directed, but rather wrote to the undersigned May 30, 2002 stating that they did not intend to order a transcript and requested that this Court issue a decision based upon Lewin's March 8, 2001 Affidavit. In such Affidavit, Lewin admitted that TPH had used plaintiffs' intellectual property in violation of the Permanent Injunction, although he states that such "violations were inadvertent and overlooked rather than an intentional violation" of the Permanent Injunction — Lewin Mar. 8, 2001 ¶ 11 — and estimates that plaintiffs' damages as a result thereof amounted to a maximum of $25,375. Id. at ¶ 14. Inasmuch as defendants had admitted that plaintiffs suffered an estimated $25,375 in damages due to TPH's violation of the permanent injunction, this Court will order TPH to pay plaintiffs an additional $25,375.
Plaintiffs have chosen to rely entirely upon Lewin's March 8, 2001 Affidavit to establish that defendants violated the Permanent Injunction. Although Lewin admits in such affidavit that TPH had violated the Permanent Injunction, he does not admit that he personally violated the Permanent Injunction, therefore the judgment will be entered solely against TPH.
Accordingly, it is hereby ORDERED that TPH shall pay $25,375 to plaintiffs and that counsel for defendants shall contact this Court to make arrangements to pick-up TPH's corporate records within thirty days of the filing of this Order.