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Century 21 Real Estate LLC v. Ed/Var Inc.

United States District Court, N.D. California, San Jose Division

July 10, 2014

CENTURY 21 REAL ESTATE LLC, Plaintiff(s),
v.
ED/VAR INC., et. al., Defendant(s).

ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT [DOCKET ITEM NO(S). 46]

EDWARD J. DAVILA, District Judge

Presently before the court is a Motion for Partial Summary Judgment filed by Plaintiff Century 21 Real Estate LLC ("Plaintiff"). See Docket Item No. 46. Defendants Ed/Var Inc. ("Ed/Var"), Carlos Vargas ("Vargas"), and Eriberto Fernandez ("Fernandez")[1] failed to file opposition to the motion. After a careful review of the relevant pleadings, the court has determined that Plaintiff is entitled to summary judgment on its contractual breach and trademark claims. Accordingly, the unopposed Motion for Partial Summary Judgment will be granted for the reasons explained below.

I. BACKGROUND

Plaintiff is a well-known real estate brokerage franchisor and has developed an expansive franchise system that utilizes and relies on a family of trade and service marks unique to Plaintiff's brand (hereafter the "Century 21® Marks"). See Decl. of Marc Fischman ("Fischman Decl."), Docket Item No. 42, at ¶¶ 3-4. The marks are each registered on the Principal Register of the United States Patent and Trademark Office.[2] Plaintiff uses the Century 21® Marks on goods, in advertisements, and in educational and other training materials, as well as in newsletters and global computer networks as part of its franchising plan. Id. at ¶ 6.

This case involves a franchise brokerage located in Salinas, California. Id. at ¶ 7. Vargas and Fernandez, each in their capacity as a 50% owner of Ed/Var, signed a Franchise Agreement with Plaintiff with an effective date of September 4, 2000. Id .; see also Decl. of Jacqueline Bertet ("Bertet Decl."), Docket Item No. 46, at ¶ 4, Ex. A. Under the terms of the Franchise Agreement, Ed/Var agreed to pay monthly royalty fees amounting to 6% of its gross revenues or a minimum of $500 per month, and advertising fees of 2% of its gross revenues or a minimum of $289 per month. See Bertet Decl., at ¶ 6. The terms of the agreement also required Ed/Var to send to Plaintiff a report of each brokerage transaction in which a royalty fee will be payable within seven days of the execution of initial documents. Id. at Ex. A, § 11(B)(i)(c). Plaintiff was provided the right to terminate the contract in the event Ed/Var defaulted on any payments or any other obligation required under the Franchise Agreement. Id. at ¶ 7. In the event of termination, Ed/Var was obligated to "[i]mmediately and permanently discontinue" the use of the Century 21® Marks. Id. at Ex. A; see also Fischman Decl., at ¶ 12.

In conjunction with the Franchise Agreement, Vargas also executed a personal guaranty for all of Ed/Var's obligations, which included a payment guaranty of the royalty and advertising fees described above (hereafter, the "Guaranty"). Id. at ¶ 5, Ex. B.

After signing the Franchise Agreement, Defendants failed to pay the royalty and advertising fees as required, and failed to properly report on royalty-bearing transactions. Id. at ¶ 9; see also Decl. of Aaron Rudin ("Rudin Decl."), Docket Item No. 46, at Ex. B. This default resulted in the issuance of three notices to Defendants on April 23, 2012, June 13, 2012, and November 29, 2012, in which Plaintiff notified Defendants of their default under the Franchise Agreement and allowed them a specified period of time to cure. See Bertet Decl., at ¶¶ 11-13, Exs. D-F.

Defendants failed to cure the defaults after receiving the notices from Plaintiff. Id. at ¶ 14; see also Rudin Decl., at Ex B. As a result, on January 4, 2013, Plaintiff sent Defendants a notice terminating the Franchise Agreement as of January 9, 2013. See Bertet Decl., ¶ 14, Ex. G. The notice also demanded all past due royalty and advertising fees by January 18, 2013, and notified Defendants to immediately cease the use of all Century 21® Marks. Id.

Defendants have not paid to Plaintiff any of the outstanding fees owed pursuant to the now-terminated Franchise Agreement. Id. at ¶ 16; see also Rudin Decl., at ¶ 4, Ex. B. Nor did Defendants cease further use of the Century 21® Marks after January 9, 2013. See Fischman Decl., at ¶¶ 14-15; Ex. B; see also Rudin Decl., at ¶ 4, Ex. B. They continued to use the marks until at least February 13, 2013. See Fischman Decl., at ¶ 14.

Plaintiff initiated this action on February 23, 2013. See Compl., Docket Item No. 1. This motion followed.

II. LEGAL STANDARD

A motion for summary judgment or partial summary judgment should be granted if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Addisu v. Fred Meyer, Inc. , 198 F.3d 1130, 1134 (9th Cir. 2000). The moving party bears the initial burden of informing the court of the basis for the motion and identifying the portions of the pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate the absence of a triable issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986).

If the moving party meets this initial burden, the burden then shifts to the non-moving party to go beyond the pleadings and designate specific materials in the record to show that there is a genuinely disputed fact. Fed.R.Civ.P. 56(c); Celotex , 477 U.S. at 324. The court must draw all reasonable inferences in favor of the party against whom summary judgment is sought. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986).

However, the mere suggestion that facts are in controversy, as well as conclusory or speculative testimony in affidavits and moving papers, is not sufficient to defeat summary judgment. See Thornhill Publ'g Co. v. GTE Corp. , 594 F.2d 730, 738 (9th Cir. 1979). Instead, the non-moving party must come forward with admissible evidence to satisfy the burden. Fed.R.Civ.P. 56(c); see Hal Roach Studios, Inc. v. Feiner & Co., Inc. , 896 F.2d 1542, 1550 (9th Cir. 1990).

A genuine issue for trial exists if the non-moving party presents evidence from which a reasonable jury, viewing the evidence in the light most favorable to that party, could resolve the material issue in his or her favor. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248-49 (1986); Barlow v. Ground , 943 F.2d 1132, 1134-36 (9th Cir. 1991). Conversely, summary judgment must be granted where a party "fails to make a showing sufficient to establish the existence of an ...


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