Progressive Marketing, Inc. v. Nuova Ricambi S.R.L.

          [PROPOSED] ORDER GRANTING DEFENDANT AND COUNTERCLAIMANT NUOVA RICAMBI S.R.L. MOTION FOR SUMMARY JUDGMENT

          JOHN A. MENDEZ JUDGE.

         Defendant and Counterclaimaint Nuova Ricambi, s.r.l.'s ("NRSRL") Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment (the "Motion") came on for hearing on August 27, 2019. The Court having considered the Motion, the opposition filed by Progressive Marketing, Inc. ("Progressive"), any oral argument, as well as the pleadings and documents on file, and for all the reasons stated in the attached transcript^[1] rules as follows:

         1. The Court grants NRSRL's motion for summary judgment on Progressive's first cause of action for infringement of a federally registered trademark;

         2. The Court grants NRSRL's motion for summary judgment on Progressive's second cause of action for federal trademark infringement, false designation of origin and unfair competition;

         3. The Court grants NRSRL's motion for summary judgment on Progressive's third cause of action for common law trademark infringement unfair petition;

         4. The Court grants NRSRL's motion for summary judgment on Progressive's fourth cause of action for breach of contract;

         5. The Court grants NRSRL's motion for summary judgment on Progressive's fifth cause of action for unfair competition under California Business & Professions Code § 17200, et seq.;

         6. Accordingly, the Court grants NRSLR's motion for summary judgment on all causes of action Progressive brought against NRSRL.

         7. The Court also grants NRSRL's motion for summary judgment on its first cause of action for the cancellation of trademark registration No. 3, 873, 210.

         IT IS SO ORDERED.

         EXHIBIT A

         BEFORE HONORABLE JOHN A. MENDEZ

         REPORTER'S CORRECTED TRANSCRIPT OF PROCEEDINGS PAGE 41, LINE 15 RE: MOTIONS FOR SUMMARY JUDGMENT

         For the Plaintiff: MURPHY, CAMPBELL, ALLISTON & QUINN MARK A. CAMPBELL JESSICA B. COFFIELD Attorneys at Law

         For the Defendant Sproparts, LLC and La Marzocco USA, LLC: PETERSON WATTS LAW GROUP, LLP GLENN W. PETERSON Attorney at Law

         For the Defendant Nuova Ricambi, S.R.L. and Marcello Zanesi: FOX ROTHSCHILD LLP JEFFREY H. GRANT Attorney at Law

         Official Reporter: KACY PARKER BARAJAS CSR No. 10915, RMR, CRR, CRC

         Proceedings recorded by mechanical stenography. Transcript produced by computer-aided transcription.

         SACRAMENTO, CALIFORNIA, TUESDAY, AUGUST 27, 2019, 1:30 PM

         THE CLERK: Calling civil 17-2644, Progressive Marketing, Incorporated versus Sproparts.

         Can I have counsel state their appearances, please.

         MR. CAMPBELL: Yes. I'm Mark Campbell for the plaintiff, Progressive Marketing, Inc.

         MS. COFFIELD: Jessica Coffield here for plaintiff.

         THE COURT: Use the microphones, if you could.

         MS. COFFIELD: Sorry about that. Jessica Coffield.

         MR. GRANT: Jeff Grant on behalf of defendant and counterclaimant Nuovo Ricambi and Marcello Zanesi.

         MR. PETERSON: Good afternoon, your Honor. Glenn Peterson, Peterson Watts Law Group, for the defendants La Marzocco and Sproparts.

         THE COURT: Okay. Have a seat. Make sure the microphones are in front of you.

         Mr. Grant, are you on the pleadings?

         MR. GRANT: I entered a notice of appearance last week.

         THE COURT: Okay. So you are intimately familiar with the motion?

         MR. GRANT: Yes, your Honor.

         THE COURT: Okay. There are a number of motions for summary judgment before the Court this afternoon, and we'll take them up. Let me start with the evidentiary objections, give you my reaction and response to those.

         Progressive, the plaintiff, has objected to paragraphs 20 and 21 of the defendants' statement of undisputed facts. In paragraph 20, the statement says Progressive cannot create a genuine dispute of material fact that the attorney who represented it before PTO, all in caps, in 2010 did not know the difference between a trade name and a trademark. And paragraph 20 of the undisputed facts statement says Progressive cannot create a genuine dispute of material fact as to whether the PTO relies on an applicant's declaration of superior use.

         Progressive objected to these facts on the grounds that the plaintiff's attorney is not a party to the action, and second, the purported facts are not actually facts. That is correct. These are statements or conclusions of law, not facts. So the Court sustains the objections.

         We're going to refer to Nuovo Ricambi, S.R.L. as NRSRL, all in caps. They've raised objections to Exhibit 118 in Progressive's opposition as well as a number of statements in Mr. Lemos's declaration. They've also objected to Exhibit 106. In terms of the exhibits, Exhibit 118, it's a web page that Mr. Campbell found on La Marzocco, L-a M-a-r-z-o-c-c-o, on their website. An evidentiary objection is raised that the exhibit lacks foundation and it's hearsay. The statement of a party opponent is not hearsay, and Mr. Campbell has established personal knowledge. The objection to that exhibit is overruled.

         On Exhibit 106, which is the bill of sale, a company in the asset sale agreement, the defendants object arguing that Mr. Lemos failed to establish personal knowledge of the exhibit, that argument I didn't find to have much merit. The objection to that exhibit would be sustained only to the extent that the statements in this agreement are offered for the truth of the matter asserted.

         And then there were a number of objections to several statements made in Mr. Lemos's declaration. In particular, paragraphs 11, 18 and 19, 31, 44 through 45 and 47 on the grounds that Mr. Lemos lacks personal knowledge. Those objections to those specific statements have been and are going to be sustained, other than if they're offered for state of mind. The Court has considered them for that purpose. Paragraph 45 is hearsay. There is no exception to the hearsay rule, and the objection is sustained.

         And then La Marzocco and Sproparts, that's spelled S-p-r-o-p-a-r-t-s, also challenged Mr. Lemos's declaration a bit more generally that his declaration is replete with unsupported conclusory statements that are patently outside the scope of his personal knowledge, and in particular they point to paragraphs 18 and 34. The objections to both of those are sustained.

         Having made those rulings, quite honestly it makes little or no difference to the Court's overall view of the motions for summary judgment. Courts self-police in terms of evidentiary objections. Lawyers feel the need to make them, I understand, but again they carry little or no weight in terms of the actual merit or lack thereof of the motions for summary judgment.

         Okay. Let me start with the motion made by the individual Mr. Zanesi, Marcello, M-a-r-c-e-1-l-o, Zanesi. Mr. Campbell, you named him in a counterclaim after answering the counterclaim filed by NRSRL. It honestly was somewhat difficult to figure out why you brought a claim or what the claim was for. It appears to be a breach of contract claim since the allegation says, let's see, if for some reason Zanesi's claim to be successor in interest to the Nuovo Ricambi USA, LLC is successful, he is then liable for the LLC's breach of contract. So I'm assuming it's a breach of contract claim.

         Mr. Zanesi correctly points out that he's not a party to the contract, and the contract doesn't purport to confer Progressive rights to the Nuovo Ricambi USA trademark. You didn't file any specific opposition to his motion for summary judgment. Normally when that happens, I take that as a concession that there really isn't any basis for bringing a claim against him, so I'm not sure what you think is the basis for allowing the counterclaim against him to go forward. I'll give you an opportunity to hear from you, but I didn't see anything in your opposition that addressed that specifically.

         MR. CAMPBELL: Yes, your Honor. I was taken by surprise by that motion. I guess in hindsight maybe I could have assumed that they were going to file a motion for Mr. Zanesi on his individual claim, but that was never part of our meet-and-confer process. So I think if I had it to do all over again I would have brought it up at the time at the meet and confer.

         But so when I got it, I mean, I looked at it and I said, well, the basis for this, they're admitting here that he's not a party to the contract. And if he's not a party to the contract, he can't sue on the contract. So his action's barred by that admission, and I felt like with that out of the way, then they were right.

         THE COURT: Okay. So you're conceding that you don't - you can't bring a counterclaim. I'm not - I don't have his counterclaims - MR. CAMPBELL: I understand.

         THE COURT: -- in front of me. I'm just focusing on what is before me.

         MR. CAMPBELL: Yes.

         THE COURT: Okay. So I am going to grant summary adjudication/summary judgment in favor of Mr. Zanesi on his motion for summary judgment on the breach of contract counterclaim.

         Okay. And I want to turn to NRSRL's motion for summary judgment just on the claims brought by Progressive. So on the complaint itself, there's five claims, and beginning with the breach of contract claim, again I'm not sure your theory as to how you think you can file a breach of contract claim against NRSRL under the asset sales agreement when they weren't a party to that contract. There's two reasons that they give as to why they think you can't maintain that claim. One is that they weren't a party to the asset sale agreement, and second, and we'll get into this, but that the asset sale agreement in fact didn't purport to transfer ownership of any trademark. Just focusing on that first reason though, again it's undisputed, right? They're not a party to that asset sale agreement?

         MR. CAMPBELL: Well, in the sense of being - appearing with that name of that entity on a signature line, that's the case. But we contend that Mr. Zanesi, Sr. provided a broad authorization to his son to act on behalf of that entity. That is 101, Exhibit 101.

         THE COURT: It's attached to your complaint too, right?

         MR. CAMPBELL: No. That is not.

         THE COURT: The agreement for purchase and sale of assets?

         MR. CAMPBELL: It's a different document. I was referring to --

         THE COURT: Isn't that the contract we're talking about?

         MR. CAMPBELL: I think it's part of the group of documents that makes up the contract as a whole.

         THE COURT: Well, your breach of contract claim is for that - an alleged breach of that agreement, right?

         MR. CAMPBELL: We didn't know of the existence of this Exhibit 101 at the time it was filed. We contended in the complaint that Mr. Zanesi was acting - Mr. Zanesi, Jr. was acting as an agent of the S.R.L. at the time of the negotiations and at the time the written agreement was drafted, redrafted, and signed. Subsequently, we -

         THE COURT: But the contract itself contradicts that. I mean, there's nothing in here that mentions NRSRL at all, unless I'm looking at the wrong contract, but I don't think I am. Am I incorrect, Mr. Grant?

         MR. GRANT: No, your Honor.

         THE COURT: Your client's not a party to this contract.

         MR. GRANT: That's correct, your Honor.

         MR. CAMPBELL: There is a letter from Mr. Zanesi, who is the CEO of the SNC, stating that he's giving his son --

         THE COURT: That's fine. But the contract still doesn't include -- again, if that's your argument, I understand it. I don't in any way think it allows you to maintain the breach of contract claim, but if that's all, I read that argument in your opposition. Is there anything else you're relying on other than that?

         MR. CAMPBELL: Well, all of the circumstances surrounding the negotiation of the written agreement, the fact that Mr. Zanesi, Jr. was working for SNC at the time, admittedly was spending half of his time in Italy working there and half in the United States, the fact that he pled in his answer and counterclaims that he was in charge of the export function of that entity and was present negotiating, all of those things go into our allegation that, when he made the representations that are contained in that written contract, he was authorized to do that expressly by the letter of authority and also impliedly by all the circumstances.

         THE COURT: Okay. I understand your argument. The second part of the argument as to why you can't maintain the breach of contract claim is in fact the contract itself doesn't transfer ownership of a trademark. It transfers ownership of a trade name and, as you point out, goodwill. Your response in the statement of undisputed facts in the opposition brief is that transfer of goodwill in effect is, as a matter of law, a transfer of the trademark. I'm simplifying but that basically was your response to the argument. You didn't get a trademark.

         You got a trade name and goodwill in the asset purchase agreement. There's nothing in any contract that I've seen that's been submitted by the parties that uses the phrase trademark or purports to transfer a trademark in this asset purchase agreement, again reading the four corners of the documents.

         So am I understanding your argument right that because the word "goodwill" is included in the contract, your argument is, as a matter of law, I should consider that to be a transfer of the trademark?

         MR. CAMPBELL: I think when a trade name is conveyed in conjunction with the goodwill, I rely upon the cases that say the goodwill is inseparable from the trademark, and there are several cases like that. So that's -- that is our argument.

         THE COURT: Okay.

         Okay. I think you covered this in your briefs, Mr. Grant, but I wanted to give you a chance to respond if you want or add anything to what's already in your briefs.

         And Mr. Peterson, I'm not sure, but I don't -- maybe I'm wrong, but I didn't get the impression that your clients ...