United States District Court, S.D. California
ORDER GRANTING DEFENDANTS/COUNTERCLAIM ANTS' MOTION FOR SUMMARY JUDGMENT
[Doc. No. 314]
ANTHONY J. BATTAGLIA, District Judge.
The matter comes before the Court on Defendants/Counterclaimants' motion for summary judgment on Plaintiff's Fifth Affirmative Defense (the "Oral Agreement Defense") and Inheritance Theory Defense. (Doc. No. 314.) Defendants seek the Court's ruling as a matter of law that Plaintiff's Fifth Affirmative Defense is time barred and/or fails on the merits and Plaintiff's Inheritance Theory Defense has been waived for failing to raise in a timely matter and/or will cause undue prejudice if allowed at this stage of the proceedings. The matter was taken under submission on July 2, 2014. After due consideration of the Parties's briefs filed in support and opposition, the Court GRANTS the motion for summary judgment.
A. Relevant Factual Background
This trademark infringement action arises from a family dispute over the right to use a trademark in the United States that was previously established in the family business in Lebanon. Plaintiff was first to use and register the mark in the United States and filed this infringement action against Defendants. Defendants filed a counterclaim alleging that Plaintiff is the infringer and requesting cancellation of Plaintiff's registered mark.
Plaintiff's founder, Anto Baghdassarian (hereinafter "Anto") and Defendant Ara Baghdassarian (hereinafter "Ara") are brothers. Anto and Ara both worked for many years in the family dairy business in Lebanon ("Karoun Lebanon"). Karoun Dairies is a trade name which has been used in the family business since 1931 and is registered in Lebanon. Karoun Lebanon was well known in the Middle East and exported its products as far as Paris and London. (Doc. No. 37 at 10-11.) In approximately 1990, after the death of his father and due to civil unrest in Lebanon, Anto sold his interest in Karoun Lebanon to Ara, and moved to the United States. While Ara asserts that they entered into an agreement that Anto would not enter the dairy business, Anto disputes this. Additionally, Anto asserts that the two brothers entered into an Oral Agreement dictating that Ara would have the exclusive right to use the Karoun mark in Lebanon in connec-tion with the operation of Karoun Lebanon and Anto would have the right to use the mark for any and all purposes in all other geographic areas. (Doc. No. 316 at 2.)
Subsequently, Ara continued to manage Karoun Lebanon, which proceeded to expand its business. Karoun Lebanon participated in local and international exhibitions, and advertised in international directories and journals. (Doc. No. 37 at 11.) In 2004 or 2005, Karoun Lebanon had to temporarily suspend production in Lebanon during a military conflict; however, it continued to use the Karoun mark through its exclusive licensees Defendants Karoun Dairies, Inc., a Canadian corporation ("Karoun Canada"), and Karlacti, Inc., a Delaware corporation ("Karlacti").
Plaintiff is a corporation organized and existing under the laws of the State of California. Anto named his business after the family business in Lebanon and marketed his products to Middle Eastern emigrants in California and elsewhere in the United States. In 1993, Plaintiff registered the trademark "Karoun Dairies" and in 2003, it registered the mark "Karoun's California Cheese, a Whole Milk Cheese."
In June 2006, Ara's counsel filed a trademark application to register the Karoun mark in the United States on behalf of Karoun Lebanon. Plaintiff objected and de-manded Ara withdraw the application. Ara refused and asserted that Karoun Lebanon intended to expand its business into the United States under the Karoun name and demanded that Plaintiff cease and desist using the name. Ara argued that Anto had sold his right to use the mark to Ara when he sold him his interest in the family business. In May 2007, Ara's trademark application was abandoned. ( See Doc No. 27 at 4.)
B. Relevant Procedural Background
In August 2008, Plaintiff filed a complaint against Ara, Karlacti and Karoun Canada. (Doc. No. 1.) Plaintiff amended its Complaint twice in 2009. The operative complaint claimed trademark infringement under the Lanham Act and federal common law, false designation of origin and federal unfair competition, dilution, and unfair competition under California law. Defendants filed a counterclaim for false designation of origin and federal unfair competition under the Lanham Act, cancellation of trademark registrations, and accounting. (Doc. No. 37.) Plaintiff replied to the counterclaims by asserting nineteen (19) affirmative defenses. The Fifth Affirmative Defense is entitled "Breach of Oral Agreement" in which Plaintiff alleges that current attempts by Ara and his corporate entities to challenge Anto's use of the Karoun mark in the United States are in breach of the Oral Agreement. (Doc. No. 89 at 8.)
In November 2010, Plaintiff sought leave to file a Third Amended Complaint ("TAC") seeking the Court's permission add Anto as a new party and to add a new claim for breach of the alleged Oral Agreement. (Doc. No. 38.) This Court denied that motion, finding Plaintiff could have stated the claim when the lawsuit was first initiated, lacked diligence, and failed to show good cause to allow amendment even under the liberal standard of Federal Rule of Civil Procedure 15. (Doc. No. 220 at 18-20.) Thereafter, Anto, in his individual capacity, filed an action in the Superior Court of California, County of Los Angeles asserting the breach of Oral Agreement claim against Ara. Ara removed to the district court for the Central District of California. In ruling on Ara's motion to dismiss, District Judge Stephen V. Wilson found the claim to be governed by California's statute of limitations rather than Lebanese law. Accordingly, Judge Wilson dismissed Anto's claim finding it to be time-barred. Antranik Baghdassarian v. Ara Baghdassarian, et al., 11-cv-10285 SVW (Jcx) (Feb. 16, 2012) (Doc. No. 314-3, Ex. E.). Anto appealed and the Ninth Circuit Court of Appeals reversed Judge Wilson's ruling after finding the district court lacked jurisdiction where the Complaint did not state an amount in controversy. The Central District case has been remanded back to state court. ( Id. at Ex. F.)
As to the purported Inheritance Theory Defense, Plaintiff claims that Anto inherited a right to use the Karoun mark when Ohannes passed away in 1989. Plaintiff first alluded to this theory in its April 2011 Expert Report of Pierre El Khoury. This theory was also mentioned in Plaintiff's reply to Defendant's motion for summary judgment filed on June 10, 2011. (Doc. No. 203 at 7.) On March 13, 2014, the Court held a status conference and Plaintiff expressed the intent to rely on the Inheritance Theory as a defense at trial.
On September 29, 2012, this Court granted Defendant's motion for summary judgment and denied Plaintiff's motion for summary judgment. (Doc. No. 223.) Accordingly, the only remaining issues to be determined are those raised by the counter-claims and the defenses to the counterclaims. On April 23, 2014, this Court held a case management conference where the Parties alerted the Court to issues suitable for summary judgment before proceeding to trial. The Court ordered briefing on: (1) whether the alleged Inheritance Theory defense has been waived as an affirmative defense and (2) whether the alleged Oral Agreement, if valid, is barred by the statute of limitations. (Doc. No. 311.) Defendants filed their motion on June 2, 2014. (Doc. No. 314.) Plaintiff has filed a response. (Doc. No. 316.)
II. LEGAL STANDARD
Summary judgment is appropriate 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 judgment as a matter of law." Fed.R.Civ.P. 56(e) (West 2006). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505 (1986). In considering the motion, the court must examine all the evidence in the light most favorable to the non-moving party and "all justifiable infer-ences are to be drawn in his favor." Id. at 255, 267.
When the moving party does not bear the burden of proof, summary judgment is warranted by demonstration of an absence of facts to support the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548 (1986). Summary judgment must be granted if the party responding to the motion fails "to make a suffi-cient showing on an essential element of her case with respect to which she has the burden of proof." Id. at 323.
A. Inheritance ...