Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-00661/USCOURTS-azd-2_04-cv-00661-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1051 Trademark Infringement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Best Western Internat ional, Inc., an

Arizona non-profit corporation,, 

Plaintiff, 

vs.

Bristol Inns, LLC, a Tennessee limited

liability company; and Desiree Keithan, 

Defendants. 

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No. 04-0661-PHX-DGC

ORDER

Defendants Bristol Inns, LLC and Desiree Keithan have filed an Amended Motion

for Relief from Judgment. See Doc. #15. Plaint iff has filed a response and Defendants have

filed a reply. See Doc. ##17, 20. The Court has also considered documents filed by

Defendants under seal. See Doc. #19. 

The Court p reviously entered a default judgment in favor of Plaintiff on the basis

of Defendants' failure to respond to the complaint. See Doc. #12. Defendant s explain in

their Amended Motion that Defendant Keithan failed to respond to the complaint because

she was informed by her boss, Mack Trammell, that the company would hire an attorney

to defend the action. Defendants assert that Mr. Trammell and Bristol failed to respond to

the complaint because Mr. Trammell suffers from medical problems that affect his memory,

and he simply has no memory of receiving the complaint. Defendants have filed medical

documents under seal in support of Mr. Trammell's medical condition. 

Case 2:04-cv-00661-DGC Document 21 Filed 10/26/05 Page 1 of 5
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Defendants rely in part on Rule 60(b)(1) of the Federal Rules of Civil Procedure,

which grants district courts discretion to relieve a party from a judgment on the basis of

"mistake, inadvertence, surprise, or excusable neglect." Defendants also seek relief under

Rule 60(b)(3) (fraud) and 60(b)(6) (any other reason justifying relief). 

The Court's decision in this matter is guided by TCI Group Life Ins. Plan v.

Knoebber, 244 F.3d 691 (9th Cir. 2001). T he Nint h Circuit explained in TCI that "default

judgments are disfavored." Id. at 694. Whether a party is entitled t o relief under Rule

60(b)(1) turns on three factors: "'whether the defendant's culpable conduct led to the

default; whether the defendant has a meritorious defense; and whether reopening the

default judgment would p rejudice the plaintiff." Id. at 696. The Ninth Circuit explained that

this three-part inquiry comports with the factors identified by the Supreme Court in

Pioneer Inv. Servs. Co. v. Brunswich Assocs. Ltd. P'ship, 507 U.S. 380, 395 (1993). TCI, 244

F.3d at 696.

The Court concludes t hat t he default judgment in this case was not the result of

Defendants' culpable conduct . The Ninth Circuit has explained that "'a defendant's

conduct is culp able if he has received actual or constructive notice of the filing of the

action and intentionally failed t o answer.'" Id. 697 (quoting Allen Newman Prods., Inc. v.

Albright, 862 F.2d 1388, 1392 (9th Cir. 1988)) (emphasis in original). The court noted that the

word "neglect" in the "excusable neglect" standard of Rule 60(b)(1) "'encompasses simp le,

faultless omissions to act and, more commonly , omissions caused by carelessness.'" Id.

(quoting Pioneer, 507 U.S. at 388). 

Based on facts submitted by Defendants and not disputed by Plaint iff, the Court

concludes that the default judgment in this case was not the result of Defendant s' culpable

conduct. Defendant Keithan relied on assurances by her boss t hat t he action would be

defended by corporate counsel. Defendant Bristol's failure to resp ond was based on Mr.

Trammell's medical condition.

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The second consideration under TCI asks whether Defendants have a meritorious

defense. "A defendant seeking to vacate a default judgment must present specific facts

that would constitute a defense." Id. at 700. If the "defendant presents no meritorious

defense, then nothing but pointless delay can result from reopening the judgment." Id. at

697. 

Defendants articulate a defense only with respect to the portion of the Court 's

default judgment that awarded $506,514.61 in liquidated damages. Defendants have

presented specific facts to suggest they have a meritorious defense to this claim.

Defendants have not made such a showing, however, wit h respect to the other portions

of the Court's judgment: (1) the award of $3,563.82 under Counts I and II of the Complaint,

plus interest at the rate of 1.5% per month from June 1, 2004 until paid in full; (2) the award

of injunctive relief related to Defendants' use of Plaintiff's trademarks and service marks;

and (3) the award of $4,441.55 in at t orney s' fees and costs. Therefore, assuming each of

the factors set forth in TCI is satisfied, the Court will set aside only that portion of the

default judgment related to liquidated damages. 

T he third consideration under TCI addresses prejudice to the plaintiff. "T o be

prejudicial, t he setting aside of a judgment must result in greater harm than simply delaying

resolution of the case." Id. at 701. The standard is whether Plaintiff's ability to pursue its

claim will be hindered. Id. Plaintiff argues that it is prejudiced by t he delay due to Mr.

Trammell's loss of memory and his consequent inability to provide relevant evidence. The

medical evidence provided by Defendants, however, demonstrates that Mr. Trammell's

medical condition has existed since at least 2000, and possibly since 1997. See Doc. #19.

Thus, Defendants' delay in responding t o t he complaint has not caused the loss of any

evidence in the possession of Mr. Trammell. The Court has identified no additional

prejudice to Plaintiff that will result from reopening the judgment.

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1

 Defendants also argue that the default judgment should be set aside under

Rule 60(b)(3). The only evidence present ed in sup port of this argument, however,

concerns allegedly incorrect information related to the amount of liquidated damages.

Thus, the only portion of the judgment that would be set aside under Rule 60(b)(3) would

be the award of liquidated damages. Defendant s p rovide no basis for setting aside any

other portion of the judgment under Rule 60(b)(6).

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Applying the three-part analysis set forth in TCI, the Court concludes that the

portion of the default judgment awarding liquidat ed damages of $506,514.61 should be

vacated. All other portions of the judgment shall remain in effect.1

Defendants argue that Plaint iff's motion should be denied because of the almost

one-year delay between entry of the default judgment and filing of the Amended Motion.

Defendants have provided evidence suggesting that they first learned of the default

judgment on August 10, 2005. Plaintiff asserts that a let t er regarding the default judgment

was sent t o Defendants in October of 2004, but the supporting affidavit fails to attach

copies of the letter and Defendants deny receiving such notice. Moreover, Rule 60(b)

specifically states that a motion for relief under Rule 60(b)(1) may be filed within one year

of judgment. Consistent with the Ninth Circuit's teaching that default judgments are not

favored, the Court will not deny the Amended Motion that was filed within this one-year

time period.

In light of the Court's ruling, it appears that three issues now remain in the case:

(1) whether Plaintiff is entitled to recover liquidated damages; (2) if so, the proper amount

of liquidated damages; and (3) if liquidated damages cannot be recovered, whether Plaintiff

has suffered actual damages that are compensable in this case. On or before November 4,

2005, the parties shall file a joint case management report setting forth a proposal for the

prompt resolution of these questions. A case management conference will be held on

November 16, 2005 at 4:00 p.m. to establish a schedule for completing this litigation. 

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IT IS HEREBY ORDERED:

1. Defendants' Amended Motion for Relief from Judgment (Doc. #15) is granted

in part and denied in part as set forth above.

2. Defendants' Motion to Set Aside Judgment (Doc. #13) is denied as moot.

3. The Court's Default Judgment (Doc. #12) and Order (Doc. #11) are modified

to eliminate the award of liquidated damages under Count III of the

Complaint in the amount of $506,514.61. All other terms of the Default

Judgment (Doc. #12) and Order (Doc. #11) remain in effect.

4. A case management conference will be held on November 16, 2005 at

4:00 p.m.

DATED this 19th day of October, 2005.

Case 2:04-cv-00661-DGC Document 21 Filed 10/26/05 Page 5 of 5