Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-00132/USCOURTS-azd-2_04-cv-00132-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1114 Trademark Infringement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Best Western International, Inc.,

Plaintiff, 

vs.

Oasis Investments, L.P., et al., 

Defendants. 

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No. CV 04-0132-PHX-PGR

 ORDER

Pending before the Court is the Plaintiff Best Western International, Inc.'s ("Best

Western") Motion for Partial Summary Judgment (Doc. 12). Best Western, pursuant to Rule

56 of the Fed. R. Civ. P., moves this Court for partial summary judgment on its breach of

contract claims against Defendants Oasis Investments, L.P. ("Oasis") and Richard M. Knapp

("Knapp"). The Court now rules on the motion.

I. INTRODUCTION

Best Western is an Arizona non-profit corporation headquartered in Phoenix, Arizona.

Best Western operates as a membership organization consisting of individually owned and

operated hotels (i.e., its members). The rights and obligations of Best Western's members

are determined by membership and are set forth in Best Western's Application and

Agreement (the "Membership Agreement") and in Best Western's Bylaws. Additionally,

Best Western's board of directors, which is comprised of individual Best Western members,

establishes Best Western's rules and regulations. 

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Best Western provides its members with, among other services, a worldwide

reservation system and worldwide marketing campaigns, as well as the option to participate

in collective purchasing of hotel equipment, furnishings and supplies. In addition, each Best

Western member is authorized to use the Best Western marks in connection with its hotel

pursuant to a limited, non-exclusive license. In exchange for receiving the Best Western

services and the license, members are obligated to pay membership fees and other

assessments. Upon default by a member hotel of its obligations to Best Western, the Best

Western board of directors may terminate the membership and the related use of the Best

Western license. Within 15 days following the termination of membership, the former

member must cease and desist from using, and remove from public view, all Best Western

marks and all references to Best Western. The former member is also required to cease and

desist from using any item that is similar to the Best Western marks in spelling, sound and

appearance.

On April 27, 2000, Oasis, through its agent, Knapp, executed the Membership

Agreement. Upon Best Western's approval of the Membership Agreement, Oasis became a

Best Western member and the Membership Agreement became the contract controlling the

relationship between the Defendants and Best Western. Defendants owned and operated the

hotel formerly known as the Best Western Sherwood Hills Resort, located in Wellsville,

Utah.

Pursuant to paragraph 20 of the Membership Agreement, Best Western granted Oasis

the Best Western license, allowing them to use the Best Western marks in connection with

the Hotel and subject to the terms of the Best Western license. Furthermore, the agreement

provided that any portion of any sign displaying a Best Western mark would remain the

property of Best Western. Paragraph 24 of the Membership Agreement states that Best

Western is entitled to liquidated damages when a former Best Western member continues to

use the Best Western marks in connection with its hotel for more than 15 days following the

termination of the Best Western membership and the Best Western icense. The amount of

liquidated damages is equal to 15% of the mean of the Hotel's room rates per day multiplied

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by the total number of rooms for every day that the former member continues to use the Best

Western marks beyond the 15-day grace period.

On July 7, 2003, Best Western notified Knapp that Oasis' membership was terminated.

 Additionally, Best Western advised Oasis that is must discontinue use of the Best Western

marks. In correspondence dated September 7, 2003, Best Western demanded that Defendants

cease and desist from their continued unauthorized use of the Best Western marks. Best

Western further warned the Defendants that such noncompliance with the terms of the

Membership Agreement and trademark laws would result in litigation. Despite these

warnings, Best Western states that Defendants continued to use the Best Western marks in

connection with the Hotel past the 15-day period after termination of the Membership

Agreement. According to the Plaintiff, on October 8, 2003, the amount of liquidated

damages due and owing to Best Western by Defendants was $120,931.20. However, Best

Western claims that the Defendants have continually refused to pay Best Western the

amounts due and owing.

Best Western seeks partial summary judgment on its breach of contract claims

regarding Defendants failure to pay the previously referenced fees along with their failure

to cease use of the Best Western marks as required by the Membership Agreement and its

termination.

II. LEGAL STANDARD AND ANALYSIS

Summary judgment should be granted pursuant to Federal Rule of Civil Procedure 56

only if no genuine issues of material fact exist therefore entitling the moving party to

judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In ruling

upon a motion for summary judgment, the court must view the evidence in the light most

favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

U.S. 574, 587 (1986). 

To prevail on its Breach of Contract claims, Best Western is required to show the

existence of a contract, its breach and the resulting damage. Graham v. Asbury, 540 P.2d

656, 657 (1975); Coleman v. Watts, 87 F. Supp. 2d 944, 954 (D. Ariz. 1998). In this case,

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the existence of a contract between Best Western and Oasis is not disputed. As such, it is

only necessary for the Court to determine whether there are genuine issues of fact regarding

the Defendants' alleged breach of that contract and the resulting damages. 

According to the record before the Court, it is not disputed that Defendants executed

the Membership Agreement on April 27, 2000 and thereafter became Best Western Members.

It is also undisputed that through the Membership Agreement the Defendants agreed to

timely pay all fees, dues, charges and assessments imposed by the Best Western Board of

Directors and to promptly pay the costs of all goods and services provided by or ordered

through Best Western. 

In response to Best Western's motion, the Defendants raise a single argument.

According to the Defendants, Best Western was required to provide notice of its intent to

terminate the existing Membership Agreement through certified mail. The Defendants assert

that Best Western failed to follow this contractual requirement therefore invalidating Best

Western's termination efforts. The Court finds this argument wholly without merit.

Chapter Twelve (XII) of Best Western's Rules and Regulations sets forth the

procedure for cancellation of membership. Pursuant to Chapter XII, when a Best Western

membership is in jeopardy of cancellation the member is entitled to notice by certified mail

that the board will consider cancellation and notice that the member may demand a hearing

to show cause why the membership should not be cancelled. In this case, Best Western

properly sent Defendants their Chapter XII Notice by certified mail in June of 2003. 

According to the contract between the parties, certified mail is used prior to the decision to

terminate in order to assure Best Western that the member has received the notice of

possibility of cancellation and preserves the member's due process rights to a hearing.

However, there is no requirement that notice of membership termination, as opposed to

Chapter XII notice, be sent via certified mail. Neither the Membership Agreement not Best

Western's Articles, Bylaws, or Rules and Regulations require notice of termination to be sent

by any specific type of mail. Still, it is undisputed that the Defendants' Notice of

Termination was sent via express mail on July 7, 2003. In fact, Paragraph 29 of Best

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Western's Complaint states: "On or about July 7, 2003, Best Western, in accordance with

applicable provisions of the Membership Agreement, Bylaws, and Rules and Regulations,

notified [Defendants that their] membership was terminated." Defendants admitted the

veracity of this paragraph in their answer to the Complaint without comment. Furthermore,

Defendants do not contend that they failed to receive such termination notice 

Defendants failed to substantively respond to any of the arguments set forth in Best

Western's Motion for Partial Summary Judgment. Likewise, the Defendants failed to

properly controvert any of the facts supporting Best Western's motion. In fact, the

Defendants' response to Best Western's motion fails to comply with Local Rule 56.1 as it

does not set forth specific facts establishing that there is a genuine issue of material fact in

dispute. Furthermore, Defendants' response does not even refer to the portion of the record

where controverting facts may be found. Under such circumstances, Defendants' noncompliance may be deemed as a consent to granting of the motion, and the Court may

dispose of the motion summarily. See Local Rule 7.2(i). 

Regardless of the Defendants' failure to file a controverting statement of facts in this

matter, the Court finds that the undisputed material facts demonstrate the existence of a

contract, breach thereof, and resulting damages. Although the Defendants' response attempts

to preclude summary judgment on the breach of contract claims by arguing that Best

Western's termination efforts were invalid, the Court finds the assertion without merit and

immaterial as far as the present motion is concerned. Therefore,

IT IS ORDERED that the Best Western International, Inc.'s Motion for Partial

Summary Judgment (Doc. 12) is GRANTED. 

DATED this 31th day of January, 2006.

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