Dodie's Complaint - The Trademark Firm

Dodie's Complaint - The Trademark Firm

Case 3:15-cv-03953-N Document 1 Filed 12/11/15 Page 1 of 13 PageID 1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS D...

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Case 3:15-cv-03953-N Document 1 Filed 12/11/15

Page 1 of 13 PageID 1

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION REEF ENTERTAINMENT, LLC V. CHRISTOPHER MCGUINNESS, INDIVIDUALLY, CHARLE’S MCGUINNESS, INDIVIDUALLY DODIE’S REEF, INC, AND CAJUN DEAUX, INC, D/B/A DODIE’S SEAFOOD CAFÉ

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3:15-cv-3953 CIVIL ACTION NO.: _____

PLAINTIFF’S ORIGINAL COMPLAINT TO THE HONORABLE UNITED STATES DISTRICT COURT: COMES NOW, Plaintiff Reef Entertainment, LLC, and files this Original Complaint against Christopher McGuinness, Individually, Dodie’s Reef, Inc., Charlie McGuinness, Individually, and Cajun Deaux, Inc., d/b/a Dodie’s Seafood Café. I. Parties 1.

Reef Entertainment, LLC (“REEF”) is a Limited Liability Company with its

principal place of business at 2821 Greenville Ave, Dallas, Texas 75206, hereinafter “Plaintiff”. 2.

Defendant Christopher McGuinness is an individual who may be served at

his residence at 6303 Richmond Avenue, Apt#205, Dallas, TX 75214. 3.

Defendant Dodie’s Reef, Inc. may be served by serving its registered

agent, Christopher McGuinness, at 6303 Richmond Avenue, Apt#205, Dallas, TX 75214. 4.

Defendant Charles McGuinness is an individual who may be served at his

place of business, 2129 Greenville Avenue, Dallas, Texas 75206. 5.

Defendant Cajun Deaux, Inc., doing business as “Dodie’s Seafood Cafe”,

hereinafter “Café”, may be served by serving its registered agent, Charles McGuinness at 2129 Greenville Avenue, Dallas, Texas 75206 (sometimes “Café“). 1

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II. Jurisdiction and Venue 6.

The District Court has jurisdiction over this matter pursuant to 28 U.S.C

§1331 since this matter includes allegations related to Federal statutes. Specifically, the court has jurisdiction under 15 U.S.C. § 1121. The court has jurisdiction over the unfair competition claims herein under the provisions of 28 U.S.C. § 1338(b) in that such claims are joined with a substantial and related claim under the Trademark Laws of the United States, 15 U.S.C. § §

1051 et seq.

The court has supplemental

jurisdiction over related state law claims pursuant to 28 U.S.C. § 1367 since those claims are so related to other claims in this action that they form part of the same case or controversy. 7.

Venue is proper in the Northern District of Texas based on 28 U.S.C.

§1391(b) because a substantial part of the events or omissions giving rise to the claims occurred in this district, and more specifically in the Dallas, Texas geographic region. III. Background Facts 8.

Defendant Chris is the son of Defendant Charles, and together they

owned and operated the Cajun Deaux, Inc., doing business as “Dodie’s Seafood Cafe”, hereinafter “Café” at 2129 Greenville Ave, Dallas, Texas. Defendant Charles provided most of the day to day management of Café which operated as a diner, focused on good Cajun based recipes served in a family atmosphere. While Chris’ father Charles continued to provide most of the day to day management of Café, Chris desired to expand the Cajun recipes into a new, more upscale, sports-bar type themed restaurant/bar concept and saw the potential to develop multiple locations. In that vein, he opened a new upscale, sports-themed restaurant/bar at 2821 Greenville Avenue (hereinafter “Dodie’s at 2821”) under the following signage/mark:

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Dodie’s 2821 Greenville (purchased by Plaintiff)

9.

In a somewhat convoluted manner, Chris in his individual capacity and via

a new corporation that he named Dodie’s Reef, Inc., jointly held the intellectual property and trademarks associated with “Dodie’s”. The Lease at 2821 Greenville and the hard assets, however, were entirely in the name of and owned by Dodie’s Reef, Inc. After suffering numerous financial difficulties, Chris (with the consent and personal participation of his father, Charles) desired to and did sell the Dodie’s at 2821 Greenville to Plaintiff. Upon information and belief, they also both used the same lawyer, Tom Davies, who handled the sellers’ side of the transaction. 10.

More specifically, on or about June 2, 2013 Plaintiff Reef Entertainment,

LLC (“Plaintiff”) entered into an Asset Purchase Agreement with Defendant Christopher McGuinness and Defendant Dodie’s Reef, Inc. (cumulatively defined as the “Selling Parties” under the transaction documents) whereby for approximately $900,000 Reef acquired the Dodie’s Cajun New Orleans Restaurant located at 2821 Greenville Ave, Dallas, Texas 75206. This acquisition was effectuated through a comprehensive set of transaction documents executed at closing on or about July 31, 2013, (“Closing”) including but not limited to a Bill of Sale which conveyed the “Assets” which were defined as: “(a) the name, ‘Dodie’s Reef’, together with any and all goodwill associated with such name, trademark and other intellectual property rights associated with such

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name; (b) all recipes of Dodie’s Reef; (c) all signage related to Dodie’s Reef; and (d) all websites, domain names, and related intellectual property associated with Selling Parties as it relates in any manner to “Dodie’s Reef”. 11.

The only registered trademark associated with the Dodie’s name is now

owned by Plaintiff in the form of the Trademark “DODIE’S”, Registration Number 3692222, Registration Date of 10/06/2009, for the mark “DODIE’s” in connection with Class 043, Restaurant and bar services. Plaintiff filed its Affidavit of Continuing use with the U.S. Patent and Trademark Office on 10/05/2015. 12.

The parties contemplated that, subject to certain requirements, Chris

would remain as a consultant/adviser to Plaintiff, and the parties even contemplated that Plaintiff might develop additional restaurants outside the 5 mile radius with or without Chris, depending on how the relationship evolved. Further, the parties were well aware that Chris and his father, Defendant Charles, operated and intended to continue to operate the Dodie’s Seafood Café at 2129 Greenville Ave. Thus, while the Transaction Documents included a non-competition provision (paragraph 1.2) prohibiting Selling Parties from opening or assisting in the opening of any restaurant within a five (5) mile radius, it created a carve out which stated that “Seller Parties may also continue to own and operate (in whole or in part) the existing “Dodie’s” restaurant which is different in focus and menu from Dodie’s Reef” (the Dodie’s at 2821 Greenville). The parties also understood that Chris was involved financially and as a co-manager with another Dodie’s restaurant, named “Dodie’s Live Frisco”. The co-ownership/management by Chris under Plaintiff’s license back of the right to use the “Dodie’s” name in association with other restaurants outside the five (5) mile radius was based on the assumption that Chris would maintain involvement and quality control, thereby preventing dilution of the mark “Dodie’s” and/or abandonment through naked licensing. The parties contemplated future business together in other locations, though no specifics were agreed upon until profitability could be established at Plaintiff’s 2821 location. 4

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Unfortunately, shortly after the acquisition was completed Plaintiff

discovered that Selling Defendants had made numerous misrepresentations, failed to pay vendors and tax collectors, paid some employees “off books” via cash and unreported transactions, and similar deficiencies which caused Plaintiff to file suit against Selling Defendants. The relationship with Chris completely deteriorated and he became adverse to the acquired business. The dispute resulted in Plaintiff obtaining a final judgment against Selling Defendants (namely, Dodie’s Reef, Inc. and Chris McGuinness Individually) in the amount of $201,500, entered May 21, 2015 issued by the 162nd District Court, Cause No. DC-14-14781, plus post judgment interest thereafter. To date, this judgment remains wholly unpaid. Plaintiff’s Judgment against Selling Defendants did not relate to nor did it involve Chris’ continuing obligations to honor his non-compete agreement, nor did it involve post-Closing interference with Plaintiff’s business. In addition to Plaintiff’s judgment of $201,500, Selling Defendants are subject to numerous judgments, tax and other claims entered over the last several years. Chris has orchestrated an effort with his father, Defendant Charles, to interfere with the collection of those judgments and claims through Charles acting as a front-man for Chris. There are multiple examples of this conduct, but only the ones relevant to Plaintiff’s claims against Defendants herein will be discussed. 14.

Because of Chris’ emotional and financial problems, upon information and

belief his partner in the Dodie’s Live Frisco bought Chris’ out of any interest in Dodie’s Live Frisco in April/May, 2015. To circumvent the judgments/claims against Chris as noted above, upon information and belief Chris requested that the payout for his ownership in Dodie’s Live Frisco be made to his father, Charles McGuinness, not to Chris. Upon further information and belief, Charles participated in the effort to hinder, delay and/or defraud creditors of Chris through participating in this scheme. 15.

On a separate but related note, Chris and Charles had historically

represented that the ownership of Defendant Cajun Deaux, Inc., d/b/a Dodie’s Seafood 5

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Café was divided 50% to Charles McGuinness, 40% to Chris McGuinness, and 10% to Laura Kromer. After judgments began to pile up against Defendant Chris, including but not limited to Plaintiff’s $201,500 judgment, both Chris and Charles began to tell creditors that Charles owned 100% of Café and that Chris had no ownership. Again, this was with the intent to hinder, delay and defraud creditors of Chris. A simple search of just the Dallas County District Clerk’s public website reveals numerous judgments against Chris and related entities totaling over $1.2 million, which does not even include the amounts owed to Plaintiff. Exemplar copies of the judgments are attached hereto. 16.

Adding insult to injury, despite his personal participation in discussing the

sale of the 2821 Dodie’s to Plaintiff as part of the Closing (though, admittedly Charles did not execute any documents since he claimed no ownership in the assets being transferred), Charles formed Red Snapper, LLC, d/b/a 504 Bar & Grill which was a significant duplication of the look, feel and theme of 2821 Dodie’s sold to Plaintiff. Defendants opened the 504 Bar & Grill only a few blocks down the street from Plaintiff’s 2821 Dodie’s.

On several occasions, Defendants utilized the name “Dodie’s” in

connection with the 504 Bar & Grill, though at other times after receiving cease and desist communications they have periodically stopped using any official reference to “Dodie’s” at the 504 Bar & Grill. Their marketing materials, however, continue to represent that the 504 Bar & Grill is “from the Dodie’s guys”, much of the trade dress, recipes and theme are similar to Plaintiff’s 2821 Dodie’s. The only carve out under the transaction documents to allow use of the name “Dodie’s” within five miles of Plaintiff’s 2821 Dodie’s was for the Café for so long as it was operated by Defendants Chris and Charles. Thus, any use by Defendants of the intellectual property, including the trademarks, purchased by Plaintiff as part of the Closing would constitute an infringement of Plaintiff’s rights under the transaction documents.

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Moreover, Defendants’ opening of the 504 location is well within the 5 mile

radius contractually protected for the benefit of Plaintiff. More specifically, the Selling Defendants had contractually agreed:

18.

The 504 restaurant represents yet another instance of Charles and Chris,

operating as father and son, acting in concert to hinder, delay and defraud creditors. Moreover, in this instance such conduct infringes on the trademarks and intellectual property owned by Plaintiff, unfairly competes with Plaintiff, and blatantly violates the contractual provision set forth in section 1.2 of the Non-Compete Agreement. 19.

In short, to avoid collection by Chris McGuinness’ creditors the

Defendants herein have claimed for at least the last year that Chris McGuinness has no interest in or ownership or control of any restaurant/bar associated in any manner with the name “Dodie’s”, or any other restaurant for that matter. Plaintiff has thus lost the benefit of the bargain in numerous respects: (a) Chris did not assist with Plaintiff’s business and instead hindered the business; (b) Chris did not improve the goodwill associated with the mark “DODIE’s” and has instead brought nothing but ill-repute, lawsuits, unpaid tax claims, and disputes associated with the name “DODIE’s”. Chris has unfortunately enlisted the support of his father, Charles, in this effort; and while such efforts to assist a son are understandable, such conduct to hinder, delay and defraud creditors is not legally justifiable and puts Charles squarely within the liability for such actions. Chris McGuinness’ conduct is so egregious and is in such blatant disregard of the rights of Plaintiff under the transaction documents executed at Closing that Chris’ right to use the name “DODIE’s” must be terminated. Moreover, in addition 7

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to Chris’ egregious conduct justifying such termination, his alleged non-involvement, non-ownership and non-control of the quality and consistency of the recipes and the service utilized in connection with the name DODIE’s constitutes an intent to abandon any such rights, including the abandonment of Plaintiff’s license back to Chris to use the name “DODIE’s” as set forth in the transaction documents. IV. Causes of Action 20.

Suit for Declaratory Relief - Plaintiff restates and incorporates the

paragraphs, above, in furtherance of its plea that actual controversies exist as to the rights and legal relations between the Plaintiff and the Defendants, including whether Chris has abandoned and/or breached his obligations to such an extent that his continuing rights to “use” the Dodie’s name outside the five (5) mile radius of Plaintiff’s 2821 Greenville restaurant location should be terminated. For this reason, a declaratory judgment action pursuant to 28 USC § 2201-02 is proper. 21.

False Designation of Origin and False Advertising under 15 U.S.C.

§

1125(a) Plaintiff restates and incorporates the paragraphs above. Defendants’ use of the DODIE’s mark in connection with the promotion and sale of Defendants’ goods and services is likely to confuse, mislead, or deceive customers, purchasers, and members of the general public as to the origin, source, sponsorship, or affiliation of Defendants’ goods and services

and is likely to cause such people to believe in error that

Defendant’s goods and services have been authorized, sponsored, approved, endorsed, or licensed by Plaintiff, or that Defendants are in some way affiliated with Plaintiff. Moreover, Plaintiff’s original goal as disclosed to Defendants was to expand with the mark, DODIE’S, to other markets, utilizing partners, vendors, and other relationships for such expansion. Defendants’ underhanded and mischievous conduct is damaging the ability to grow the business at the business development level, as well as at the retail consumer level.

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Lanham Act - Misrepresentation of Services 15 U.S.C. § 1125(a)(1)(B).

Plaintiff restates and incorporates the paragraphs above. Plaintiff seek any and all damages due to the Defendants’ false advertising regarding their right to utilize the name DODIE’s at the 504 restaurant which is within the five (5) mile radius and/or the right to use the name DODIE’s without a valid license from Plaintiff. More specifically, either Chris McGuinness is part of 504 restaurant and in blatant breach of his noncompete agreement, or the 504 restaurant is wrongfully representing that it was created by the “Dodie’s guys” as per its marketing materials. 23.

Breach of Contract. Plaintiff restates and incorporates the paragraphs

above. The Selling Defendants (Chris McGuinness and Dodie’s Reef, Inc.), were contractually prohibited from assisting in the formation and marketing and development of the 504 Restaurant; yet they breached such contractual obligations by participating in such actions. 24.

Texas Common Law Unfair Competition.

incorporates the paragraphs above.

Plaintiff restates and

The Non-Selling Defendants conspired and

cooperated with Selling Defendants to reference the relationship with DODIE’s which Defendant Charles McGuinness knew was not permitted since he was well aware of and participated in the transaction whereby Plaintiff acquired the 2821 Restaurant assets. Plaintiffs repeat and incorporate the paragraphs above. Plaintiffs seek any and all damages due to the Defendants unfair competition. Unfair competition under Texas law “is the umbrella for all statutory and non-statutory causes of action arising out of business conduct which is contrary to honest practice in industrial or commercial matters.” American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir. 1974), quoted in United States Sporting Prods., Inc. v. Johnny Stewart Game Calls, Inc., 865 S.W.2d 214, 217 (Tex. App.—Waco 1993, writ denied). 25.

Federal Trademark Infringement under 15 U.S.C. § 1114 Plaintiff restates

and incorporates the paragraphs above.

Defendant’s use of the DODIE’s Mark in 9

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connection with the promotion and sale of Defendants’ goods and services is likely to cause consumers to erroneously believe that Defendants are affiliated with Plaintiff. While there was an original intent to cooperate within the strict guidelines of the transaction documents, Defendants have breached and/or interfered with such contractual rights to such an extent that any continued use of the DODIE’s mark will confuse consumers and harm Plaintiff. Such conduct is willful. 26.

Common Law Trademark Infringement Plaintiff restates and incorporates

the paragraphs above. Defendants’ use of the DODIE’s mark in connection with the promotion and sale of Defendants’ goods and services is likely to confuse, mislead, or deceive customers, purchasers, and members of the general public as to the origin, source, sponsorship, or affiliation of Defendants’ goods and services and is likely to cause such people to believe in error that Defendant’s goods and services have been authorized, sponsored, approved, endorsed, or licensed by Plaintiff, or that Defendants are in some way affiliated with Plaintiff. Moreover, Plaintiff’s original goal as disclosed to Defendants was to expand with the mark, DODIE’S, to other markets, utilizing partners, vendors, and other relationships for such expansion.

Defendants’

underhanded and mischievous conduct is damaging the ability to grow the business at the business development level, as well as at the retail consumer level. 27.

Abandonment of Trademark and Intellectual Property Rights Plaintiff

restates and incorporates the paragraphs above. The only Defendant to have ever claimed to have any rights whatsoever to the mark “DODIE’S is Defendant Chris McGuinness. Chris claims to have no assets and claims to have disassociated himself from a position of having control over the goodwill, quality and consistency of goods and services delivered under the DODIE’s mark – even in those instances permitted under the transaction documents.

Therefore, by his conduct and by his lack of conduct,

Defendant McGuinness has abandoned any rights he ever had or the rights preserved under the transaction documents to utilize the mark, DODIE’S. 10

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Fraudulent Transfer Act.

Defendant

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Charles

McGuinness

and

Defendant Cajun Deaux, Inc. have acted in concert and conspired with Defendants Chris McGuinness and Dodie’s Reef, Inc. with the actual intent and the successful delay in defrauding various creditors of Chris McGuinness as a Judgment Debtor. 29.

Conspiracy. The above allegations are restated and incorporated herein.

The Defendants were members of a combination of people and/or entities with the illegal object of tortuous interference and breach of contracts as to Plaintiff.

The

members had a meeting of the minds as to this object and committed such unlawful acts. The members conspired amongst themselves and with individuals yet known, and perhaps others.

Plaintiff has suffered an injury as a result, including the loss of

business opportunities and damage to its reputation.

Plaintiff seeks to hold the

Defendant conspirators jointly and severally liable for all acts done by any of them in furtherance of the unlawful combination. 30.

Exemplary Damages. Upon a finding that Defendant’s actions constituted

fraud, Plaintiff Reef Entertainment, LLC will be entitled to an award of exemplary damages against Defendant. Reef Entertainment, LLC hereby prays for an award of exemplary damages, in the amount as found by the trier of fact. V. Attorney Fees 31.

Plaintiffs are entitled to recover reasonable and necessary attorney fees

that are equitable and just under Texas Civil Practice & Remedies Code section 37.009 because this is a suit for declaratory relief, as well as pursuant to 28 USC § 2202 and 15 USC § 1117(a). VI. Damages

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By reason of Defendants' acts alleged herein, Plaintiff has suffered, and

will continue to suffer, damages to Plaintiff’s business, reputation, and good will and have lost sales and profits that Plaintiff would have made but for Defendants' acts. 33.

Plaintiff also requests that the Court award as damages to the Plaintiff, the

greater of treble the amount of actual damages suffered by Plaintiff or statutory damages as stated in 15 USC § 1117. 34.

Plaintiff further requests that the Court award as damages to the Plaintiffs,

the greater of (1) the Defendants' profits, (2) the amount of actual damages suffered by Plaintiffs, (3) any sum above these amounts not exceeding three times the amount, or (4) any higher amount as the Court may award in its discretion according to the circumstances of this case, pursuant to 15 USC § 1117(a). VII. Conditions Precedent 35.

All conditions precedent to Plaintiff’s claim for relief have been performed

or have occurred. WHEREFORE, PREMISES CONSIDERED, Plaintiff prays that after final trial of this matter, that the Court enter judgment in favor of Plaintiff, with the judgment awarding the following relief: a. Declare that Defendants have no right to use the mark “DODIE’s”, except that conditioned on meeting certain quality standards of the food and service at the Café (as defined above) Defendants may continue to use the mark at that location and only at that location, further conditioned on the financial interests held by Defendant Chris McGuinness in such establishment being liquidated and tendered to Plaintiff up to the full amount of the uncollected judgment against Defendant Christopher McGuinness; b. Actual damages associated with the operation of the 504 Restaurant which is in violation of Plaintiff’s trademark and intellectual property rights as well as being in breach of the contract between Plaintiff and Selling Defendants; c.

Treble and Additional Damages;

d.

Equitable relief as requested herein;

e.

Prejudgment and post-judgment interest as allowed by law; 12

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f.

Attorney’s fees;

g.

All costs of court; and

h.

Such other and further relief to which Plaintiffs are entitled.

Respectfully submitted, PAGEL, DAVIS & HILL, P.C.

_/s/ Martyn B. Hill__________ MARTYN B. HILL State Bar No. 09647460 Federal Bar No. 13806 [email protected] MICHAEL A. HARRIS State Bar No. 24046030 Federal Bar No. 586840 [email protected] 1415 Louisiana Street, 22nd Floor Houston, Texas 77002 Telephone: 713-951-0160 Facsimile: 713-951-0662 ATTORNEYS FOR PLAINTIFF, REEF ENTERTAINMENT, LLC

435606

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