Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_03-cv-02353/USCOURTS-azd-2_03-cv-02353-1/pdf.json

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

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 The Court will deny the request for oral argument because the Court concludes that

oral argument will not aid its decisional process. See Mahon v. Credit Bur. of Placer County,

Inc., 171 F.3d 1197, 1200 (9th Cir. 1999).

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Century 21 Real Estate Corporation, 

Plaintiff, 

vs.

Daryush B. Motlagh and Jennifer

Motlagh, husband and wife; and Integrity

Assurance, Inc., an Arizona corporation, 

Defendants.

Daryush B. Motlagh and Jennifer Motlagh,

husband and wife,

Counterclaimants,

vs.

Century 21 Real Estate Corporation,

Counterdefendant.

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No. CV-03-2353-PHX-DGC

ORDER

Pending before the Court is Plaintiff’s motion for summary judgment on its breach of

contract and unjust enrichment claims and Defendants’ counterclaims. Dkt. #77. Defendants

have filed a response to the motion and Plaintiff has filed a reply. Dkt. ##79, 83. For the

reasons set forth below, the Court will grant the motion in part.1

Case 2:03-cv-02353-DGC Document 85 Filed 09/19/06 Page 1 of 7
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 Plaintiff voluntarily dismissed Edmonds from this action on September 20, 2004.

Dkt. #32.

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I. Background.

Plaintiff and Defendants Daryush Motlagh and John Edmonds entered into a Century 21

Real Estate Franchise Agreement (“Agreement”) on July 9, 1997. The Agreement granted

Motlagh and Edmonds the right to operate a Century 21 real estate franchise in Goodyear,

Arizona. The Agreement required Motlagh and Edmonds to pay Plaintiff royalty fees in the

amount of 8% of certain revenues earned in connection with the operation of the franchise.

Motlagh and Edmonds subsequently formed Integrity Assurance, Inc. (“Integrity”), a real

estate corporation that operated the Century 21 franchise. Motlagh eventually became the

sole shareholder of Integrity.2

Motlagh and Integrity each filed bankruptcy petitions on December 27, 2001. The

bankruptcy filings discharged any debt owed to Plaintiff as of the filing date, subject to

Plaintiff’s creditor status in the bankruptcy estates. The bankruptcy court issued a discharge

order with respect to Motlagh on May 29, 2002 and an order lifting all injunctions and stays

on March 25, 2003. The bankruptcy court lifted all injunctions and stays in Integrity’s

bankruptcy case and denied Integrity’s motion to assume the Agreement on August 27, 2003.

The bankruptcy court concluded that, to the extent Integrity ever had any rights under the

Agreement, the Agreement was deemed to be rejected and Integrity had no continuing rights

under the Agreement.

On November 11, 2003, Plaintiff sent Defendants a letter demanding that they cease using

Plaintiff’s trademarks. Defendants responded by informing Plaintiff that Integrity would

cease using Plaintiff’s marks in light of the bankruptcy court’s order that Integrity had no

rights under the Agreement, but that Motlagh had the right to continue using the marks since

Plaintiff had not properly terminated the Agreement. On November 18, 2003, Plaintiff sent

Defendants a letter that purported to formally terminate the Agreement.

Plaintiff commenced this action by filing a verified complaint against Defendants on

November 26, 2003. Dkt. #1. The complaint asserts four claims for relief: Lanham Act

Case 2:03-cv-02353-DGC Document 85 Filed 09/19/06 Page 2 of 7
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violations, disgorgement of profits, unjust enrichment, and breach of contract. Id. Plaintiff

requested injunctive relief and seeks to recover unpaid royalty fees incurred after Defendants

filed for bankruptcy. Id. In December 2003, the Court granted Plaintiff’s motion for a

temporary restraining order and approved the parties’ stipulation for a preliminary injunction

against Defendants. Dkt. ##8, 15. 

On December 19, 2003, Defendants filed an answer and counterclaim that purports to state

four claims for relief: breach of the implied covenant of good faith and fair dealing, breach

of contract, tortious interference with prospective advantage, and unjust enrichment. Dkt.

#13. Defendants allege that Plaintiff prevented them from receiving the benefits of the

Agreement by failing to provide administrative and technical support, marketing advice,

client referrals, and franchise-related media and products. Id. ¶¶ 69-74, 82-83. Defendants

further allege that Plaintiff disclosed their confidential financial information and diverted

client referral calls to a more favored franchisee in an effort to terminate the Agreement and

give Defendants’ franchise territory to the more favored franchisee. Id. ¶ 77-83.

Plaintiff filed a motion to dismiss the counterclaims on January 26, 2004. Dkt. #18.

Plaintiff argued that because its alleged misconduct predated the bankruptcy petitions, the

counterclaims accrued pre-petition, belonged to the bankruptcy estates, and could only be

brought by the bankruptcy trustees. The Court held a hearing on the motion on May 19,

2004. Dkt. #26. In a June 2, 2004 order, the Court denied the motion because it was unclear

whether the counterclaims belonged to Defendants or the bankruptcy estate when some of

the alleged misconduct occurred before the petition date. Dkt. 28.

Plaintiff filed a renewed motion to dismiss counterclaims and a motion for summary

judgment on Plaintiff’s breach of contract and unjust enrichment claims on May 13, 2005.

Dkt. ##50-51. Plaintiff moved to dismiss the counterclaims on the ground that the

bankruptcy court had held that the counterclaims belonged to the bankruptcy estate and that

the proper party to pursue them was the trustee, not Defendants. Dkt. #50. Motlagh

purchased the counterclaims from the bankruptcy estate on August 30, 2005. The Court

accordingly denied the motion to dismiss the counterclaims with respect to the Motlaghs and

Case 2:03-cv-02353-DGC Document 85 Filed 09/19/06 Page 3 of 7
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granted it with respect to Integrity. Dkt. #63. The Court denied Plaintiff’s motion for

summary judgment without prejudice. Id.

II. Analysis.

A. Summary Judgment Standard.

Summary judgment is appropriate if the evidence, viewed in the light most favorable to

the nonmoving party, “show[s] that there is no genuine issue as to any material fact and that

the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); see

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). “Only disputes over facts that might

affect the outcome of the suit . . . will properly preclude the entry of summary judgment.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The disputed evidence must be

“such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248.

Summary judgment may be entered against a party who “fails to make a showing sufficient

to establish the existence of an element essential to that party’s case, and on which that party

will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

B. Plaintiff’s Breach of Contract and Unjust Enrichment Claims.

In its renewed motion for summary judgment, Plaintiff contends that the Agreement

required Motlagh to pay Plaintiff royalty fees equal to 8% of total gross revenues earned in

connection with the operation of the Century 21 franchise. Dkt. #77 at 13. Plaintiff further

contends that Defendants earned $723,114.46 in gross revenues and have paid Plaintiff only

$1,068.67 in royalty fees since their bankruptcy filings. Id. Plaintiff concludes that it is

undisputed that Defendants owe Plaintiff $56,780.48 in royalty fees under breach of contract

or unjust enrichment theories. Id. at 1; see Dkt. #78 ¶ 69.

Defendants argue that Plaintiff has presented no evidence to support its alleged gross

revenue figure. Dkt. #79 at 6. Defendants further argue that Plaintiff’s gross revenue figure

does not take into account those revenues received from property management services,

which are exempt from royalty fees under the Agreement. Id.; see Dkt. #78, Ex. 1

§ 8(A)(iii). Defendant concludes that Plaintiff has failed to show that it is entitled to

summary judgment on its breach of contract and unjust enrichment claims. Dkt. #79 at 1.

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3

 The Agreement provides that it “shall be construed according to the laws of the State

of New Jersey[.]” Dkt. #78, Ex. 1 ¶ 25.

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The only evidence Plaintiff has presented to support its alleged gross revenue figure is the

declaration of Debbie Iuliano, Plaintiff’s Vice President of Real Estate Financial Services.

Dkt. #78 Ex. 15. Plaintiff cites Ms. Iuliano’s declaration in support of its contention that,

“[d]espite the fact that Defendants generated more than $700,000 by operating a [Century 21]

franchise after filing their bankruptcy petitions, Defendants made only two small payments

to [Plaintiff] during this time.” Dkt. ##77 at 14, 78 ¶ 54 (citing Ex. 15). Ms. Iuliano’s

declaration shows that Defendants’ have paid Plaintiff only $1,068.67 in franchise fees since

their bankruptcy filings. See Dkt. #78 Ex. 15 ¶ 32 & Ex. A. The declaration does not,

however, address revenues earned by Defendants after their bankruptcy filings. See id.

“[The] party seeking summary judgment always bears the initial responsibility of

informing the district court of the basis for its motion, and identifying those portions of ‘the

pleadings, depositions, answers to interrogatories, and admissions on file, together with any

affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material

fact.” Celotex, 477 U.S. at 323 (quoting Fed. R. Civ. P. 56(c)). In this case, Plaintiff has not

shown, as a matter of undisputed fact, that it is entitled to $56,780.48 in royalty fees under

the Agreement. The Court accordingly will deny Plaintiff’s motion for summary judgment

on its breach of contract and unjust enrichment claims.

C. The Motlaghs’ Counterclaims.

Plaintiff argues that it is entitled to summary judgment on the Motlaghs’ counterclaims

because they have presented no evidence that they suffered any damage as a result of

Plaintiff’s alleged misconduct. Dkt. ##77 at 16, 83 at 11 (citing Dkt. #78 ¶ 95; Kelly v.

Berlin, 692 A.2d 552, 558 (N.J. Super. Ct. App. Div. 1997) (“It is fundamental that a plaintiff

must ‘prove damages with such certainty as the nature of the case will permit, laying a

foundation which will enable the trier of the facts to make a fair and reasonable estimate.

Damage awards may not be based on mere speculation.”) (citations omitted)).3

 In the

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4 See also LRCiv 56.1(a) (“Any party opposing a motion for summary judgment must

. . . set[] forth the specific facts, which the opposing party asserts, including those facts which

establish a genuine issue of material fact precluding summary judgment in favor of the

moving party.”). 

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damages section of their initial disclosure statement, the Motlaghs stated that they “may offer

evidence of [their] out-of-pocket losses of monies invested in Century 21 trademarked

materials, signs and other paraphernalia as a set off against [Plaintiff’s] claims for fees and

damages.” Dkt. #78 Ex. 46 § C. It is undisputed that no such evidence has been disclosed

by the Motlaghs in this litigation. Id. ¶¶ 95-100; see Dkt. ## 79-81.

 A principal purpose of summary judgment is “to isolate and dispose of factually

unsupported claims[.]” Celotex, 477 U.S. at 323-24. The party opposing summary judgment

is thus required to “set forth specific facts showing that there is a genuine issue for trial.”

Fed. R. Civ. P. 56(e); see Anderson, 477 U.S. at 249 (“[I]n the face of the defendant’s

properly supported motion for summary judgment, the plaintiff [may] not rest on his

allegations . . . to get to a jury without ‘any significant probative evidence tending to support

the complaint.’”) (citation omitted); Reese v. Jefferson Sch. Dist. No. 14J, 208 F.3d 736, 738

(9th Cir. 2000) (“To rebut the motion for summary judgment successfully, the plaintiffs must

point to some facts in the record that demonstrate a genuine issue of material fact and, with

all reasonable inferences made in the plaintiffs’ favor, could convince a reasonable jury to

find for the plaintiffs.”) (citing Fed. R. Civ. P. 56; Celotex, 477 U.S. at 323; Anderson,

477 U.S. at 249).4

In this case, the Motlaghs have presented no evidence of damages from Plaintiff’s alleged

misconduct. The Court accordingly will grant Plaintiff’s motion for summary judgment on

the counterclaims. See Ghebreselassie v. Coleman Sec. Serv., 829 F.2d 892, 898 (9th Cir.

1987) (Ghebreselassie merely declared, without support, that his negligence claim raised

disputed issues of fact. Because Ghebreselassie did not sustain his burden of coming forward

with evidence to support his allegations, summary judgment was proper.”) (citing Celotex,

477 U.S. at 323); Betaseed, Inc. v. U & I Inc., 681 F.2d 1203, 1233 (“Since U & I did not

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offer evidence of any damages from the alleged conspiracy, the district court properly

granted summary judgment.”); Navellier v. Sletten, 262 F.3d 923, 939 (9th Cir. 2001)

(affirming summary judgment in the defendants’ favor where the plaintiffs “failed to point

to evidence demonstrating damages”).

IT IS ORDERED:

1. Plaintiff Century 21 Real Estate Corporation’s motion for summary judgment

(Dkt. #77) is denied in part with respect to Plaintiff’s breach of contract and unjust

enrichment claims and granted in part with respect to the counterclaims against Plaintiff.

2. The Court will set a Final Pretrial Conference by separate order.

DATED this 19th day of September, 2006.

Case 2:03-cv-02353-DGC Document 85 Filed 09/19/06 Page 7 of 7