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Passport Health, Inc., A Maryland Corporation v. Travel Med

February 9, 2011

PASSPORT HEALTH, INC., A MARYLAND CORPORATION,
PLAINTIFF,
v.
TRAVEL MED, INC., A CALIFORNIA CORPORATION AND GINA FLAHARTY, AN INDIVIDUAL AND CITIZEN OF THE STATE OF CALIFORNIA
DEFENDANTS.
TRAVEL MED, INC., A CALIFORNIA CORPORATION AND GINA FLAHARTY, AN INDIVIDUAL AND CITIZEN OF THE STATE OF CALIFORNIA, COUNTER-CLAIMANTS,
v.
PASSPORT HEALTH, INC., A MARYLAND CORPORATION,
COUNTER-CLAIM DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

Plaintiff Passport Health, Inc. moves for partial summary judgment on the liability issues in its first, second, fourth, and fifth claims in its amended complaint. Defendants Travel Med, Inc. ("Travel Med") and Gina Flaharty ("Flaharty") (collectively, "Defendants") oppose the motion. For the reasons stated below, the motion is granted in part and denied in part.

I. LEGAL STANDARD

"The moving party [for summary judgment] initially bears the burden of proving the absence of a genuine issue of material fact." In re Oracle Corp. Securities Litigation, --- F.3d ----, 2010 WL 4608794, at *5 (9th Cir. 2010). "When, as is the case here, the moving party is a plaintiff, he or she must adduce admissible evidence on all matters as to which he or she bears the burden of proof." Grimmway Enterprises, Inc. v. PIC Fresh Global, Inc., 548 F. Supp. 2d 840, 845 (E.D. Cal. 2008). If this burden is sustained, "the burden then shifts to the non-moving party to designate specific facts demonstrating the existence of genuine issues for trial." In re Oracle Corp., 2010 WL 4608794 at *5. "[W]e must draw all reasonable inferences supported by the evidence in favor of the non-moving party . . . ." Guidroz-Brault v. Missouri Pacific R. Co., 254 F.3d 825, 827 (9th Cir. 2001). However, "[a] non-movant's bald assertions or mere scintilla of evidence in his favor are both insufficient to withstand summary judgment." F.T.C. v. Stefanchik, 559 F.3d 924, 929 (9th Cir. 2009). Nor does "mere argument . . . establish a genuine issue of material fact to defeat summary judgment." MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 518 (9th Cir. 1993).

Further, Local Rule 260 requires: Each motion for summary judgment . . . [to] be accompanied by a 'Statement of Undisputed Facts' that . . . enumerate[s] discretely each of the specific material facts relied upon in support of the motion and [to] cite the particular portions of any pleading, affidavit, deposition, interrogatory answer, admission, or other document relied upon to establish that fact. . . .

Any party opposing a motion for summary judgment . . . [must] reproduce the itemized facts in the [moving party's] Statement of Undisputed Facts and admit those facts that are undisputed and deny those that are disputed, including with each denial a citation to the particular portions of any pleading, affidavit, deposition, interrogatory answer, admission, or other document relied upon in support of that denial.

E.D. Cal. R. 260 (a)-(b).

A party failing to specifically "challenge the facts identified in the [movant's] statement of undisputed facts, . . . is deemed to have admitted the validity of the facts contained in the [movant's] statement." Beard v. Banks, 548 U.S. 521, 527 (2006) (finding that a party opposing summary judgment who "fail[s] [to] specifically challenge the facts identified in the [movant's] statement of undisputed facts . . . is deemed to have admitted the validity of [those] facts[.]"); see also Farrakhan v. Gregoire, 590 F.3d 989, 1002 (9th Cir. 2010) ("If the moving party's statement of facts are not controverted in this manner, 'the Court may assume that the facts as claimed by the moving party are admitted to exist without controversy.'").

II. UNCONTROVERTED FACTS

Plaintiff owns the trademark "PASSPORT HEALTH" and has registered this "trademark with the U.S. Patent and Trademark Office for travel-and health-care-related services[.]" (Plaintiff's Statement of Undisputed Facts ("SUF") ¶ 2.)

A. Franchise Agreement

Passport Health and Travel Med entered into a Franchise Agreement in August 2007. Id. ¶ 3. Under the Franchise Agreement, Passport Health granted Travel Med the right, and Travel Med assumed the obligation, to operate a Passport Health franchise in a designated area for ten years. Id. The Franchise Agreement's ten year term commenced in September 2007, upon the opening of Travel Med's franchise. Id. Travel Med made its last royalty payment to Passport Health in March 2009. Id. ¶ 11. "After Travel Med breached the Franchise Agreement by failing to make royalty payments to Passport Health, Travel Med unilaterally terminated the Franchise Agreement effective June 12, 2009." Id. ¶ 13. Passport Health "fully performed its obligations under the Franchise Agreement." Id. ¶ 17.

In exchange for the right to own and operate a Passport Health franchise and use the Passport Health trademark, Travel Med promised to pay royalties to Plaintiff for the ten year term of the Franchise Agreement. Id. ¶ 4. The Franchise Agreement does not provide Travel Med a right of early termination. Id. Travel Med agreed in the Franchise Agreement that Plaintiff owns the Passport Health trademark. Id. ¶ 5. The Franchise Agreement includes provisions concerning Travel Med's post-termination obligations; specifically, upon termination of the Franchise Agreement, Travel Med was required to stop representing to the public that it is or was affiliated with Plaintiff and to stop using the Passport Health trademark. Id. ¶ 6.

B. Guaranty

When Travel Med executed the Franchise Agreement, Flaharty personally executed a Guaranty, guaranteeing that in the event Travel Med defaulted on its obligations, Flaharty would personally perform Travel Med's obligations under the Franchise Agreement. (SUF ΒΆ 7.) Flaharty has not ...


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